Spare Parts Inventory Model Research Articles

Spare parts provisioning strategy of warranty repair demands for capital-intensive products

The inventory cost of stocking spare parts is a nonnegligible expenditure of providing after-sales service for the manufacturers making capital-intensive products, such as electric vehicles. Especially, for warranty repair service, it is important to manage the spare stock appropriately to satisfy the warranty claims of customers as well as reduce the associated inventory costs. In this paper, we investigate the spare parts inventory issue related to a critical component for under-warranty units of a product. In particular, under the free-replacement warranty policy, failed component will be replaced by a new one by consuming the spare stock. According to the field claim data, we find that the general trend of warranty claims is nonstationary, which will be affected by the product sales and under-warranty failures. Thus, we first propose a model to forecast the time-varying warranty repair demand by explicitly considering the randomness from two major sources, that is, product sales and under-warranty failures. Under the assumptions of Poisson sales process and exponential failure distribution, the closed-form expressions of mean and variance of cumulative warranty repair demand over time are obtained. Because the number of warranty claims in each period is a one-time data, the associated distribution information is unavailable. Then, based on the properties of the demand statistics, we derived a worst-case upper bound for the associated inventory cost and formulate a three-phase finite-horizon spare parts inventory model, which can be used to appropriately address the time-varying warranty claims. Finally, numerical experiments are conducted to investigate the key parameters affecting the optimal decisions where a case study based on real data is presented.

Managing Spare Parts Inventory by Incorporating Holding Costs and Storage Constraints

Abstract A key factor for motivating intending buyers of raw materials is vendor responsiveness. Therefore, to meet demand, a pre-approved level of stocks is often maintained. In contrast, the decision to keep an uncontrolled amount of stock could be counter-productive with cost components associated with holding often ignored unintentionally. In this study, the objective is to develop a spare parts inventory model that incorporates ignored holding costs with a storage constraint for a motorcycle assembly plant (MAP). The inventory policy, structure of holding costs, and spare parts sales reports were consulted for relevant data. The spare parts were categorized and selected using ABC analysis. A spare parts inventory model, which considers ignored holding cost, was formulated. The model was executed using Lingo optimisation software release 18.0.56 to determine the pair of the order quantity (Ɋ) and reorder point (Ɍ). 177 spare part items were identified using ABC analysis. The parts categorisation revealed that 21, 31, 125 part items belong to categories A, B, and C with 81, 15 and 4% of annual sales value, respectively. From category A, nine items contributed significantly to overall sales. The demand pattern for these items was probabilistic based on their coefficient of variation. The pair (Ɋ, Ɍ) for items N, Z, AY, K, AM, J, P, AL and AZ are (174,688), (71,147), (78,150), (86,163), (18,15), (88,170), (128,118), (33,43) and (87,152), respectively. These pairs yielded a total inventory cost of ₦2,177,363 when compared to the current total inventory investment of ₦6,800,000 resulting in a 67.9% cost reduction. A model to manage spare parts inventory with relevant holding cost components was developed for MAP to ensure the availability of items, maximize usage of storage space, and minimize total inventory cost.

Optimization of the lubricating oil inventory policy applied in a mining company

ABSTRACT The mining industry should sustain mass and continuous production with an essential contribution of high-capacity machinery. Therefore, spare parts inventory management is vital in ensuring the intended mining production rate as an integral part of maintenance policies. In this paper, a mixed-integer model is presented to solve a multi-item and multi-supplier spare parts inventory model. This model is addressed to a lubricating oil inventory problem in one of the biggest multi-process mining companies in Turkey. The optimisation results show that the company’s current lubricating oil inventory policy can be improved financially by yielding an annual saving up to ₺18,566.

The impact of an emergency warehouse in a two-echelon spare parts network

Because of high downtime costs of capital goods, it is becoming increasingly more important to have spare parts available as fast as possible. In order to ensure this, companies are resorting to the use of so-called lateral and emergency shipments in case the stock is not available at the closest local warehouse. As a result, managing the inventory of spare parts in a large network becomes increasingly more complex. In this paper we present a spare parts inventory model for a two-echelon spare parts network with lateral and emergency shipments and an emergency warehouse which is intended to allow for reserving stock nearby the central warehouse dedicated to emergency requests. Although any sequence is possible, the order is commonly fixed as it is based on the time and thus costs to get a part from each other location to the customer. We first present an accurate approximate procedure to evaluate such a complex network. Using simulation we find that this approximate evaluation procedure is accurate, especially for higher availability levels. We then look at optimized basestock levels, obtained via a smart enumeration procedure, to show the benefit of making use of this emergency warehouse. We find that savings up to 30% can be obtained via an emergency warehouse.

An optimal joint maintenance and spare parts inventory model

An optimal joint maintenance and spare parts inventory model

An optimal joint maintenance and spare parts inventory model

Optimised maintenance of plant machineries is one of the important tasks to reduce plant operating cost. To carry out these maintenance tasks smoothly, development of spare parts inventory policy is the most prioritised issue. This research aims at the derivation of a joint maintenance and spare parts inventory model for a multi-component system. The decision variables are the order quantity and the ratio of ordering interval to preventive maintenance interval. We used block-based maintenance policy and periodic review inventory policy in this study. At first, a cost function is developed assuming that failure occurrences follow Poisson process with a constant failure rate and machine failures are non-repairable. Second, the model is further expanded for the case when failure occurrences follow non-homogeneous Poisson process and machine failures are repairable. The applicability of the developed models is demonstrated by numerical examples. Sensitivity analysis is also conducted to examine the effects of input parameters.

A TWO-ECHELON SPARE PARTS NETWORK WITH LATERAL AND EMERGENCY SHIPMENTS: A PRODUCT-FORM APPROXIMATION

We consider a single-item, two-echelon spare parts inventory model for repairable parts for capital goods with high downtime costs. The inventory system consists of multiple local warehouses, a central warehouse, and a central repair facility. When a part at a customer fails, if possible his request for a ready-for-use part is fulfilled by his local warehouse. Also, the failed part is sent to the central repair facility for repair. If the local warehouse is out of stock, then, via an emergency shipment, a ready-for-use part is sent from the central warehouse if it has a part in stock. Otherwise, it is sent via a lateral transshipment from another local warehouse, or via an emergency shipment from the external supplier. We assume Poisson demand processes, generally distributed leadtimes for replenishments, repairs, and emergency shipments, and a basestock policy for the inventory control.Our inventory system is too complex to solve for a steady-state distribution in closed form. We approximate it by a network of Erlang loss queues with hierarchical jump-over blocking. We show that this network has a product-form steady-state distribution. This enables an efficient heuristic for the optimization of basestock levels, resulting in good approximations of the optimal costs.

Multi-Echelon Integrated Inventory Control Strategy of Equipment Spare Parts

Inventory control strategy of spare parts is an effective way to improve equipment support efficiency and scientific and reasonable inventory policy can make spare parts availability reach the upper limit. Multi-echelon integrated inventory control strategy of equipment spare parts is studied. Three-level integrated inventory control model consisting of rear warehouse, equipment using units and spare parts supplier is established according to the architecture and control program of multi-echelon joint inventory. The algorithm of solving the proposed model is analyzed and a numerical example is provided. The proposed equipment spare parts inventory model can improve inventory quality to a certain degree and decrease the contradictions between inventory and maintenance. The correctness and effectiveness of the proposed model are verified by the example, which provides an effective model for equipment spare parts inventory.

A spare parts model with cold-standby redundancy on system level

This paper presents a variant of a spare parts inventory model with cold stand-by redundancy on system level. Redundancy on system level implies that not all systems need to be operational in order to have the whole system operational. The cold stand-by feature implies that only the minimum required systems are operational. In order to determine a cost effective spare parts package such that in a cold stand-by redundancy situation a sufficient number of systems is operational for a specified period we extend the METRIC methodology. To compute the probability that the number of operating systems during the operational period is sufficient, we present both an exact, but time-consuming method, and a fast approximation method based on fitting distributions on the first two moments. This approximation method shows very small differences when compared to the exact method. Finally, we compare both methods to a simulation model in order to test the validity and impact of our modelling.

A new partial pooling structure for spare parts networks

Motivated by real-life spare parts networks, we introduce a new spare parts inventory model with lateral transshipment. We consider a multi-item, multi-location, single-echelon system with base stock control and aggregate mean waiting time constraints. The local warehouses are divided into two types: main and regular local warehouses. Lateral transshipment is allowed from main local warehouses only. A practical advantage of this structure is that only a limited number of local warehouses has to be equipped to provide lateral transshipment. This structure represents a new form of partial pooling, with no pooling (zero main locals) and full pooling (zero regular locals) as special cases. We develop an accurate and fast approximate evaluation method, and exploit this method in a heuristic procedure for the base stock level determination. We show that only a small number of main locals is sufficient to obtain most of the full pooling benefits. We also apply our methods to case data of ASML, an original equipment manufacturer in the semiconductor supplier industry. As a result of our work ASML was able to improve spare parts planning.

Service differentiation in spare parts inventory management

The contemporary after-sales market is of increasing importance. One of the features required by the market is to provide differentiated service levels to different groups of customers. We use critical levels as a means to offer differentiation. Critical level policies aim to exploit the differences in target service levels by inventory rationing. In our multi-item single-location spare parts inventory model, we aim to minimize the spare parts provisioning cost, that is inventory holding and transportation cost, under the condition that aggregate mean waiting time constraints for all customer groups are met. In a computational experiment and a case study with data from a company in the semiconductor supplier industry, we show that significant cost reductions can be obtained when critical level policies are used instead of base stock policies (ie policies without critical levels).

Effect of commonality on spare parts provisioning costs for capital goods

Machines at customers have to be provided with spare parts upon failure. Consider a number of groups of machines, for each of which a target aggregate fill rate or target average response time (waiting time) should be met. Between groups, commonality exists, i.e., some parts occur in the material breakdown structure of machines in multiple groups. Instead of using separate stocks per group of machines, we study the potential benefits of exploiting commonality by using a shared stock for all groups together. For this purpose, we formulate a multi-item single-site spare parts inventory model, with the objective to minimize the spare parts provisioning costs, i.e., inventory holding and transportation costs, under the condition that all service level constraints are met. We develop a heuristic solution procedure using a decomposition approach as in Dantzig–Wolfe decomposition, in order to obtain both a heuristic solution and a lower bound for the optimal costs. In a case study and a numerical experiment, we show that significant reductions in spare parts provisioning costs can be obtained by using shared stocks. Furthermore, we show how the size of the potential benefits behaves as a function of the number of groups, the percentage of commonality and the occurrence of commonality in cheap or expensive items.