Spare Parts Management Case Study

Bacchetti, A, Plebani, R, Saccani, N and Syntetos, A 'Spare parts classification and inventory management: a case study' , Salford Business School Working Papers Series, 408/11 .

Abstract

The aim of this paper is to propose and discuss a hierarchical multi-criteria spare parts classification method developed for inventory management purposes and tested through an intensive case study in an Italian household appliances manufacturing company. In particular, the classification scheme under concern is built on the basis of several key dimensions in an almost hierarchical fashion, resulting in 12 different classes of spare parts, for which varying forecasting and inventory methods are proposed and tested. The results of our simulation study demonstrate the reduction of the total logistics costs by about 20% whilst the service target level is achieved for each of the classes. Even more importantly, the proposed approach is simple and straightforward enough to be understood by company managers, thus increasing the probability of its adoption (in the same or similar form) in other real world settings.

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Abstract

This paper examines the performance of two different (s,Q) inventory models for spare parts in a production plant of confectionery in The Netherlands, a simple and an advanced model. The simple approach is more or less standard: undershoot of the reorder level is not taken into account, the normal distribution is used as the distribution of demand during lead-time. The advanced one takes undershoots into account, differentiates between zero and nonzero demands during lead-time, and utilizes the gamma distribution as the demand distribution. Both models are fed with parameters estimated by a procedure that forecasts demand sizes and time between demand occurrences separately (intermittent demand). The results show that the advanced approach yields service levels close to the desired one under many circumstances, while the simple approach is not consistent leading to much larger inventories if one wants to be sure that the service level is obtained for all spare parts.

Suggested Citation

  • Strijbosch, L.W.G. & Heuts, R.M.J. & van der Schoot, E.H.M., 1998. "Improved Spare Parts Inventory Management : A Case Study," Discussion Paper 1998-135, Tilburg University, Center for Economic Research.
  • Handle: RePEc:tiu:tiucen:1594cf21-723c-4899-907b-22183ff60428

    Listed:
    • Strijbosch, L.W.G.

      (Tilburg University, Center For Economic Research)

    • Heuts, R.M.J.

      (Tilburg University, Center For Economic Research)

    • van der Schoot, E.H.M.

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