Optimization models for critical spare parts inventories-a reliability approach

• Published in: The Journal of the Operational Research Society Vol. 62; no. 6; pp. 992 - 1004
• Main Authors: Louit, D, Pascual, R, Banjevic, D, Jardine, A K S
• Format: Journal Article
• Language: English
• Published: London Taylor & Francis 01.06.2011; Palgrave Macmillan; Palgrave Macmillan UK; Taylor & Francis Ltd
• Subjects: Applied sciences; Approximation; Business and Management; Carrying costs; Case studies; Case-oriented Paper; Case-oriented Papers; Component parts; Cost estimates; Costs; Exact sciences and technology; Failure; Inventories; Inventory; Inventory control; Inventory control, production control. Distribution; Inventory management; Management; Minimization of cost; Musical intervals; non-repairable parts; Operational research and scientific management; Operational research. Management science; Operations research; Operations Research/Decision Theory; Optimization; Poisson process; Preventive maintenance; Random variables; Reliability theory. Replacement problems; repairable parts; Spare parts; stochastic processes; Studies; Transformers; Unit costs; repairable parts; inventory; stochastic processes; non-repairable parts; spare parts; Availability; Cost minimization; Probabilistic approach; Finance; Durability; Capital; Stochastic process; Modeling; Optimization; Mining; Spare part; Expenditure; Inventory control; Achievement; Reliability; Risk management; Repair
• ISSN: 0160-5682; 1476-9360
• DOI: 10.1057/jors.2010.49

In industries characterized by heavy utilization of equipment and machinery, such as mining, oil & gas, utilities, transportation, adequate stockholding of critical spare parts becomes essential. Insufficient stocks affect overall performance of physical assets, as lack of spares may result in gross penalties, lower availability or increased operational risks. On the other hand, oversized inventories lead to inefficient use of capital and may imply severe expenditures. This paper presents various approaches for the determination of the optimal stock size, when the stock is composed of (i) non-repairable or (ii) repairable parts. The paper is focused on spares for relatively expensive, highly reliable components, rather than on fast-moving spare parts. Optimization criteria considered are minimization of costs, maximization of equipment availability, and the achievement of a desired stock reliability (probability that a spare part request will not be rejected because of the lack of spares in stock). For stock reliability, instantaneous and interval reliability calculations are considered. In addition, models directed to the estimation of the remaining life of a given stock of spare parts (at a certain stock reliability level) are introduced. The paper describes several models subject to practical industrial application, and presents case studies from utilities and mining to illustrate their use.