Inventory management under various maintenance policies

Joeri Poppe, Rob Basten, Robert Boute and Marc Lambrecht

No 555260, Working Papers of Department of Decision Sciences and Information Management, Leuven from KU Leuven, Faculty of Economics and Business (FEB), Department of Decision Sciences and Information Management, Leuven

Abstract: Capital assets, such as manufacturing equipment, require maintenance to remain functioning. Maintenance can be performed when a component breaks down and needs replacement (i.e., corrective maintenance), or the maintenance and part replacement can be performed preventively. Preventive maintenance can be planned on a periodic basis (periodic maintenance), or it can be triggered by a certain monitored condition (condition-based maintenance). Preventive maintenance policies are gaining traction in the business world, but for many companies it is unclear what their impact is on the resulting inventory requirements for the spare parts that are used for the maintenance interventions. For a setting that is realistic at an OEM in the compressed air industry with whom we collaborate, we study the impact of the maintenance policy on the inventory requirements and the corresponding costs. Preventive policies increase the total demand for spare parts compared to corrective maintenance, since the former do not exploit the entire useful life of the components. This leads to higher inventory requirements. At the same time, the preventive policies inhibit advance demand information, as the interventions, and correspondingly the spare parts demands, are planned in advance. Using a simulation study, we show that by using this advance demand information in managing the spare part inventory, the increase in inventory requirements of preventive maintenance policies can to a large extent be offset; for condition-based maintenance, we find that inventories can even be lower compared to corrective maintenance, provided that the advance demand information is used correctly when managing inventories. For the OEM with whom we work, our analysis sheds light on the behaviour of the inventory related costs under various maintenance policies.

Keywords: Servitisation; Advance demand information; Maintenance; Condition-based maintenance; Spare parts inventory management (search for similar items in EconPapers)
Date: 2016-10
New Economics Papers: this item is included in nep-cmp
References: Add references at CitEc
Citations:

Published in FEB Research Report KBI_1628

Downloads: (external link)
https://lirias.kuleuven.be/retrieve/410889 Inventory management under various maintenance policies (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ete:kbiper:555260

Access Statistics for this paper

More papers in Working Papers of Department of Decision Sciences and Information Management, Leuven from KU Leuven, Faculty of Economics and Business (FEB), Department of Decision Sciences and Information Management, Leuven
Bibliographic data for series maintained by library EBIB ().