ABC classification of spare parts considering costs and service

Abstract

This paper focuses on the multi-item problem where it is necessary to reach an overall stock availability of the spare parts while minimising involved costs. Over the last years, a number of authors have proposed a variety of approaches and provided different rules in order to classify items in ABC classes. An additional optimisation has to be performed in order to minimise the inventory cost while fulfilling a target service level. The proposed approach focuses on the characteristics of spare parts and optimises the inventory cost subject to the overall target fill rate by means of a closed form formula for calculating the fill rate of every item independently. This new method is validated with a dataset of spare parts of an airline company and clearly outperforms the alternative methods in terms of inventory cost reduction and ease of calculation. Extensions of our results are also indicated.