Inventory Management Under Various Maintenance Policies. A Numerical Study in Close Collaboration with an OEM

KU Leuven Faculty of Economics and Business, KBI_1628

22 Pages Posted: 23 Nov 2016

See all articles by Joeri Poppe

Joeri Poppe

KU Leuven - Faculty of Business and Economics (FEB)

Rob J.I. Basten

Eindhoven University of Technology (TUE)

Robert N. Boute

Vlerick Leuven Gent Management School

Marc Lambrecht

KU Leuven, Research Center for Operations Management, Faculty of Economics and Business

Date Written: October 25, 2016

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

Suggested Citation

Poppe, Joeri and Basten, Rob J.I. and Boute, Robert N. and Lambrecht, Marc, Inventory Management Under Various Maintenance Policies. A Numerical Study in Close Collaboration with an OEM (October 25, 2016). KU Leuven Faculty of Economics and Business, KBI_1628. Available at SSRN: https://ssrn.com/abstract=2873416 or http://dx.doi.org/10.2139/ssrn.2873416

Joeri Poppe (Contact Author)

KU Leuven - Faculty of Business and Economics (FEB) ( email )

Naamsestraat 69
Leuven, B-3000
Belgium

Rob J.I. Basten

Eindhoven University of Technology (TUE) ( email )

PO Box 513
Den Dolech 2
Eindhoven, 5600 MB
Netherlands

Robert N. Boute

Vlerick Leuven Gent Management School ( email )

Library
REEP 1
Gent, BE-9000
Belgium

Marc Lambrecht

KU Leuven, Research Center for Operations Management, Faculty of Economics and Business ( email )

Leuven, B-3000
Belgium

Register to save articles to
your library

Register

Paper statistics

Downloads
25
Abstract Views
179
PlumX Metrics