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Spare Parts Identification and Provisioning Models

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DOI: 10.3166/jds.12.47-65

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Spare Parts Identification and Provisioning Models

a a b
Daoud Aät-Kadi , Claver Diallo & Anis Chelbi
a
Mechanical Engineering Department, Laval University, Québec, Canada, G1K 7P4
b
École Supérieure des Sciences et Techniques de Tunis, Centre de Recherche en
Productique (CEREP)
Published online: 18 Apr 2012.

To cite this article: Daoud At-Kadi , Claver Diallo & Anis Chelbi (2003) Spare Parts Identification and Provisioning Models,
Journal of Decision Systems, 12:1, 47-65, DOI: 10.3166/jds.12.47-65

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 Spare Parts Identification
and Provisioning Models

Daoud Aït-Kadi*  Claver Diallo*  Anis Chelbi**

* Mechanical Engineering Department
Laval University
Québec, Canada
Downloaded by [Dalhousie University] at 05:37 22 August 2013

G1K 7P4
{daouda, diallo00}@gmc.ulaval.ca
** École Supérieure des Sciences et Techniques de Tunis
Centre de Recherche en Productique (CEREP)
anis.chelbi@planet.tn

ABSTRACT. This paper addresses the problem of spare parts identification and provisioning for
multi-component systems. A decision tree considering technical, economical and strategical
information available is presented. Mathematical models are proposed to predict, for each
spare part, the required quantity over a given planning horizon. The objective may be to
maximize either the reliability or the availability of the system. Analytic models are proposed
to determine the inventory management parameters such as the order quantity, the order
point, the safety stock and so forth. For different management strategies, short comments
regarding some improvement issues are provided.
RÉSUMÉ. Cet article traite de problèmes liés à l’identification et à la gestion de pièces de
rechange pour des systèmes multicomposants. Un arbre de décision, tenant compte des
informations techniques, économiques et stratégiques disponibles, a été développé pour
identifier les composants pour lesquels des pièces de rechange doivent être prévues. Des
modèles mathématiques permettant de prédire les besoins sur un horizon donné et pour des
objectifs spécifiques (fiabilité, disponibilité) sont proposés. Les paramètres de gestion tels que
les quantités économiques à commander, les points de commande et les stocks de sécurité
sont déterminés à partir d’expressions analytiques développées spécifiquement pour
différentes stratégies de gestion. De brefs commentaires portant sur l’amélioration des
performances d’un système de gestion des pièces de rechange sont donnés.
KEYWORDS: maintenance, spare parts, identification, provisioning.
MOTS-CLÉS : maintenance, identification, pièces de rechange, gestion des stocks.

JDS – 12/2003. Maintaining Deteriorating Systems, pages 47 to 65

 48 JDS – 12/2003. Maintaining Deteriorating Systems

1. Introduction

During the last decade, a special attention has been paid to spare parts storage
and provisioning management (see [LEE 93, NAG 94, MAS 96, HAX 84, HUI 01]).
For many companies, the expenses incurred for keeping spare parts, until there are
used, increases significantly the cost of their final products. The re-engineering of
the management process must be, however, carefully conducted. For a system with
non-identical components, an assortment of spares, also referred to as the spare
package, must be provided and its composition must be based on technical,
economical and strategical considerations. Once the spare package identified, the
quantity of spares needed in order to assure that the system will remain in operation
for a specified length of time at minimum cost, should be determined and
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provisioned.
The total maintenance downtime includes maintenance delay time and supply
delay time. Maintenance delay occurs when no available repair resource is available
and supply delay occurs when a replacement part is not immediately available. The
downtime caused by maintenance might be reduced if more repair capability is
provided. In the supply process, there is the alternative of either stocking items at
supply depots in close vicinity, which would result in larger overall inventories or
making use of faster means of transportation, which could effectively reduce the
time required to fill the requisitioned item.
It was reported in a survey that the total expenses incurred for procurement and
stocking spares may represent around 38% of the maintenance costs.
The aim of our study is, therefore, to address the problem of spare parts
identification and provisioning for multi-component systems. An approach for the
determination of component requiring spares and their quantities is proposed.
Analytical models for the determination of their inventory management parameters
are examined. Sections 2 and 3 will deal, respectively, with the identification of
spare parts and the determination of the quantity to stock. Inventory management
strategies will be developed in sections 4 and 5.

2. Identification and classification

The aim of spare parts stock is to protect from long maintenance downtime due to
supply downtime. However, the costs incurred by the stocks, don’t allow to keep
spare parts for all components. Therefore, a procedure is needed to decide which
component should get a spare part in stock. Spare parts identification process is
usually initiated from technical considerations. However, the efficiency of this
process is affected by the quantity and the quality of the available information.
The suggested method is described in figure 1. For each considered equipment,
all possibly available information is gathered from the manufacturer, users of similar
 Spare Parts Management 49

equipment, databases, field data, etc. If partial or no information is available, then

the decision may be based, as a starting point, on the manufacturer’s
recommendations. However, in order to assure a given availability level, some
manufacturers suggest to their clients to keep a specific spare parts package during
the warranty period.

An equipment

Partial
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Complete information No data

available information available

Select suitable decision Knowledge from

See manufacturer’s
criteria based on the similar equipment
available data (e.g. + manufacturer’s recommendations
reliability) recommendations

Evaluate each component

according to the selected Preliminary
criteria spare parts list

Technical, economical,
Sort and generate the strategical filters [KAF 01]
preliminary spare part list

Final spare parts package

Figure 1. Spare parts identification process

2.1. Decisions criteria

Criticality, reliability, availability, failure impact, failure occurrence,

maintenance costs are among the most commonly used decision criteria. Once a
decision criterion is chosen, all components are evaluated according to that criterion.
Two evaluations factors are proposed.

2.1.1. Marginal importance factor (MIF)

For any given criterion, a marginal importance factor (MIF) of each component
is computed using the following equation [DUT 00]:
 50 JDS – 12/2003. Maintaining Deteriorating Systems

MIF (S,i) = ∂P(S)/∂P(i)

where P(S) denotes the expression of the decision criterion (e.g. reliability) of
the multi-component equipment and P(i) denotes the expression of the decision
criterion of the ith component or subsystem. MIF(S,i) expresses the contribution of
the ith component to the overall decision criterion (e.g. reliability) of the equipment.
If reliability is the selected criterion, then P(S) represents the system’s reliability.
P(i) is the reliability of component i.
P(ī) = 1-P(i) is the failure probability of component i.
Using the Bayes theorem, we get:
P(S) = P(S|i)P(i) + P(S|ī)[1-P(i)]
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This yields:
MIF(S,i) = p(S|i) – P(S|ī)
The importance factor can be computed for any decision criteria, provided the
required data and knowledge the equipment is available. One interest of the
importance factor is that it takes into account the structure (or design) of the
equipment.

2.1.2. Criticality factor

If the chosen criterion is the equipment criticality, then, the criticality factor or
index can be computed using the following formula [EBE 96]:

C k = α kp β k λ p t
where:
Ck = the critical index for failure mode k,
αkp = the fraction of the component p’s failures having failure mode k,
βk = the conditional probability that failure mode k will result in the identified
failure effect,
λp = the failure rate of component p,
t = duration of time used in the study.
If two or more decisions criteria (such as: failures occurrence and repair cost;
repair time and impact of failure on production; shortage cost and inventory holding
cost; inventory cost and criticality) are considered, then multicriteria decisions tools
should be used to select the spare parts. Analytic Hierarchy Process [SAA 80,
GAJ 94], multi-dimensional classifications [DUC 88] or aggregation methods
[SCH 96] are among the commonly used approaches.
 Spare Parts Management 51

2.2. Decision tree

The decision tree depicted in figure 2 is used to decide if the component should
be repaired and re-used, produced or bought. The decisions criteria are based on the
acquisition or production costs and delays.

Spare Parts Identification

Yes Is there a N
Is it a standard
local
part?
supplier?
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No
Y
N Is it
repairable?

Y Costs and N
delays
reasonable?
Costs and Y
delays Y
reasonable?

N Repair Purchase the needed quantity.

and reuse (Suppliers selection criteria
[VOK 96])
N Is it possible to
produce it?

Y Purchase the needed quantity

from the most appropriate
supplier and keep in stock.
N Costs and
delays
reasonable?
Y

Manufacture
when needed

Figure 2. Decisions tree

 52 JDS – 12/2003. Maintaining Deteriorating Systems

In the context of this study, the components are divided in two categories:
standard component, which can be used for different purposes and custom-made
components.

3. Determination of the spare parts quantity

The following approaches are designed to determine the quantity of spare parts
required to perform, only, replacements at failure. The demand due to preventive
maintenance is not included, but can be added afterwards. Figure 3 presents the way
to derive the probability density function from the available databases and field data.
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Field data Databases

Data
Distributions a priori Statistical Approaches

Exponential Data Analysis Histogram

Gamma software
Weibull
Normal
Lognormal

Probability MTTF
density function
f(t)

Failure Cumulative
rate r(t) probability
function F(t)

Reliability
function R(t)

Figure 3. Field data processing diagram

 Spare Parts Management 53

The following relations are used in figure 3:

t
F (t ) = ∫ f ( x)dx
0

R(t ) = 1 − F (t )

f (t )
r (t ) =
R(t )

∞
MTTF = ∫ R(t )dt
0
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3.1. A reliability-based procedure

A spare part may be considered as a stand-by component in the reliability point

of view. The determination of the system reliability Rs(t,n) for a stand-by structure
allows to calculate the number (n-1) of spares to keep in stock to achieve a desired
reliability level R* for a given mission duration t. Once Rs(t,n) is known (table 1) the
number of spare parts to keep is computed using the following procedure (figure 4):

t, f (t),R*,n = n0

Rs (t, n)

n = n+1 N ? Y n*= n -1
R≥R*

f(t): probability density function (p.d.f.) of the operating component

Figure 4. Number of spare parts computation procedure

 54 JDS – 12/2003. Maintaining Deteriorating Systems

λi and µi: respectively, the failure and repair rates of the ith component,

R0(t) : reliability of the component while waiting (in stand-by),

f0(t) : probability density function of the component lifetime while waiting,

R1(t) : reliability of the operating component,

f1(t) : probability density function (p.d.f.) of the operating component.

Exponential lifetime distribution – independent components – without repair – no

failure when in stock λ1≠λ2≠……≠λn
n
λ λ ........ λ λ .......... λ
R s ( t , n ) = ∑ 1 2
n
i −1 i + 1 n
⋅ e − λ i t

i = 1
∏ ( λ − λ )
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j i
j = 1
j ≠ i

Exponential lifetime distribution – i.i.d. components – without repair – no failure

when in stock. λ1=λ2=………=λn=λ.

k operating n−k
( k λ t )i
components, n-k waiting Rs(t,n ,k)=e − kλt ⋅∑
i=0 i!
Exponential lifetime distribution – i.i.d. components – with repair – no failure when
in stock.

λ1=λ2=…=λn=λ ( 1− γ ) 2γ n −1λ
R s ( t , n ) = e − zt where z= with γ = λ
1− γ n [1+ n ( 1− γ ) ] µ

General lifetime distribution – i.i.d. components – without repair – no failure when in

stock.

]k ∑ [− ]j
k operating n − k
ln R ( t )
components, n-k waiting R s (t, n ) = [R (t )
j = 0 j!

General lifetime distribution – i.i.d. components – without repair – no failure when in

stock.
t t τ2
3
components
R s (t ) = R ( t ) + ∫ f (τ ).R (t − τ ) dτ + ∫ dτ ∫
0 0
2
0
f (τ 1 ) f (τ 2 ). R (t − τ 2 ) d τ 1
with 0 < τ1 < τ 2 < t

General lifetime distribution – independent components – without repair – failure

when in stock.
t
2
components
R s ( t ) = R1 ( t ) + ∫
0
f 1 (τ ). R 0 (τ ). R1 ( t − τ ) d τ where 0 < τ < t

Table 1. Expressions of systems reliability for several cases

 Spare Parts Management 55

3.2. Procedure using the renewal theory

When the probability density functions of the components are known, the
number of spare parts to keep in order to perform replacement at failure can be
evaluated.
N(t): number of failures within the interval [0,t]
M(t): average number of renewals within the interval [0,t]
M(t)=E[N(t)]
n: number of spare parts to keep during a period of length t.
n = M ( t ) 
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∞ ∞
M ( t ) = F ( t ) + ∫ M ( t − x ) f ( x ) dx = ∑ F (i) ( t )
0
i =1

 ∞ 
n =  ∑ F ( i) ( t ) 
 i =1 
The analytical expression of the yielded equation is known only for simple
probability density functions (exponential and gamma of order 2). In the case of
more complex functions, an approximation is computed using a modified
convolution product computation algorithm developed by [CLE 76].
Table 2 presents few results.

Probability density function t M(t) n

1 0.069 1

Gamma (3;6) 5 2.06 3

10 4.56 5

1 0.40 1

Truncated Normal (1;0.2) 5 4.46 5

10 9.47 10

1 1.62 2

Weibull (2;4) 5 10.46 11

10 21.49 22

Table 2. Number of spare parts for three different probability density functions
 56 JDS – 12/2003. Maintaining Deteriorating Systems

The previous models allow the determination of the quantity of spare parts to
provide for failure replacements. But, one may be required to determine the total
number of spare parts for preventive actions and replacements at failure. In such
cases, the following results can be used.
If the equipment is replaced at failure and after T units of time, according to the
age replacement policy (ARP), then an upper bound of the expected number nA of
spare parts for a mission of length t is given by [BAR 65]:

 
 
t ( 1 − R ( t ))
n =  T 
A
 
 ∫ R ( x ) dx
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
 0 

If the equipment is replaced at failure or at T, 2T,… regardless of its age and

state, according to the block replacement policy (BRP), then the expected number nB
of spare parts for a mission of length t is given by:

nB = k [M (T ) + 1] + M (t − kT ) with kT ≤ t < (k+1)T

This demand may, also, be determined using a forecasting or regression model.

Having determined the components to keep in stock and their quantities for a
given period, the next section will focus on the determination of inventory
management parameters.

4. Inventory management strategies

It’s assumed that the unit cost of a spare part is constant and independent of the
quantity ordered (no economy of scale).
In the following section, we will examine several stock management models
taking into account the spare parts features such as long lead-time, slow and random
demand, risks of shortage, obsolescence. For each considered case, the expressions
of the total cost, the order point and the quantity to order are given. The case that
suits most the actual inventory status is chosen and the management parameters are
derived from the provided expressions.
The following notations will be used:
 Spare Parts Management 57

CT : total cost

A : ordering cost

Q : quantity to order

h : holding cost ($/unit/period)

π : shortage cost ($/unit/period)

ξ : exponential decay rate

S : order point

T : provisioning period
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LT : lead-time

C1 : cost of a preventive replacement

C2 : cost of a replacement at failure

C : acquisition cost for one component

g(.) : p.d.f. associated to the demand during the lead-time.

Average demand: γ

f(.) : p.d.f. associated to the equipment lifetime

F(t) : probability distribution function associated to the equipment lifetime

R(t) : the reliability function of the equipment R(t)=1-F(t)

M(t) : average number of replacements at failure within the interval [0,t]

x : random variable associated to the demand during the lead-time (LT)

D : demand over the time span under consideration

4.1. Model with known and constant demand and lead-time

This particular case is well known as the Wilson model. The economical order
quantity Q* and the cycle duration T* are given by:
2 AD
Q *
=
h

2 A
T *
=
h ⋅ D
 58 JDS – 12/2003. Maintaining Deteriorating Systems

[HAD 63] and [SIL 85] have shown that this result was insensitive in average
costs to errors in parameters estimation. This explains why this model is commonly
implemented in many commercial software packages despite its shortcomings
[LEE 93].

4.2. Model with constant demand and perishable items

This model accounts for failure or performance reduction during storage (liquids
volatility, deterioration of electronics, etc.). Demand d is known, constant and
shortage is permitted. In the case of an exponential decay of the items, the stock
level I(t), at instant t is given by [GHA 63]:
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d d
I (t ) = ( I 0 + ) ⋅ e − ξ ⋅t −
ξ µ
where I0 = I(0).
The expression of the total cost for acquiring and stocking is given by:
A d ⋅ξ T2
CT (T ) = + c ⋅ d + (c ⋅ + h ⋅ d ) ⋅T + h ⋅ d ⋅ξ ⋅
T 2 2
T* satisfies necessarily the following equation:
dCT(T)/dT = 0 for T=T*.
which leads to:
Cd ξ
− A + ( + hd ) T * 2
+ hd ξ T * 3 = 0
2

Once T* is obtained, the economical order quantity Q* is calculated from the

following relation:
2
T *
Q *
= d ⋅ (T * + ξ ⋅ )
2

4.3. Model with random demand and lead-time

A priori, the state of the stock is hard to find because the demand and lead-time
are random. Therefore, many inventory review systems have been proposed (e.g.
[HAX 84]). The description of the most common ones follows:
Continuous review systems:
– (s,Q) policy: when the stock level reaches s, Q units are ordered;
– (s,S) policy: when the stock level becomes equal or less than s, order up to S.
 Spare Parts Management 59

Periodic review systems:

– (S,R) policy: at each review time, a sufficient quantity is ordered to bring the
stock level to S;
– (s,S,R) policy: If, at review time, the stock level is less than or equal to s a
sufficient quantity is ordered to bring the stock level up to S; otherwise, no order is
placed.
Three inventory control policies will be presented below.

4.3.1. (s, Q) Policy

The average annual cost is the sum of the order, the holding and the shortage
costs [HAD 63]:
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Q
CT ( s , Q ) = A D + h ( + SS ) + π ⋅ D ⋅η ( s )
Q 2 Q
∞
where η ( s ) = ∫ (x-s)g(x)dx
s

The optimal plan satisfies necessarily the following equations:

∂ CT ( s , Q )
=0 for s = s * ; Q = Q *
∂Q
∂ CT ( s , Q )
=0 for s = s * ; Q = Q *
∂s

Q* and s* are easily computed with a numerical algorithm.

4.3.2. (S, R) Policy

(S,R) is the most largely used periodic review policy. It’s easy to understand and
implement [HAX 84].
The expression of the total cost was established by [HAD 63] in the particular
cases where the distribution of demand follows Poisson or normal distributions.
They also proposed a heuristic approach to find R and S in the case of general
demand with the following assumptions:
The cost Cr of a review is independent of R and S.
Shortage cost depends only on the quantity that is not delivered. The frequency
of shortage is limited.
The average total annual cost is the sum of annual costs for revision, order,
holding and shortage.
 60 JDS – 12/2003. Maintaining Deteriorating Systems

[ ] ∞
CT ( S , R ) = C r + A + h ⋅ S − γ − D ⋅ R + π ∫ ( x − S ) g ( x ) dx
R 2 RS

The optimal strategy (S*,R*) satisfies necessarily the following equations:

∂CT ( S , R)
=0 for S = S * ; R = R *
∂S
∂CT ( S , R)
=0 for S = S * ; R = R *
∂R
4.3.3. (s,S) Policy
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It’s a discrete time inventory model in which inventory positions are reviewed
periodically. [VEI 65] has established the expression of the average total cost per
period for this policy with an approach based on the renewal theory, assuming that
the demand in each period is i.i.d. and integer valued, and all stockouts are
backordered.
We define:
W(y): the average one-period holding and shortage costs when the inventory
position at the beginning of the period is y.
Pl = Probability (x = l), l = 0,1,2,….
According to [VEI 65], the long-run average cost function CT(s,S) for a given
(s,S) policy can be derived from the renewal theory.

S − s −1
A+ ∑ m ( j )W ( S −
j=0
j)
CT ( s , S ) =
M (S − s)
j
m ( j) = ∑ P m( j − l)
l=0
l

M ( j ) = M ( j − 1) + m ( j − 1)

k
M ( k ) = ∑ m (i )
i =0

m(0) = (1 − P0 ) −1

M(0) = 0

Many heuristics have been proposed to determine the optimal strategy (s*,S*)
(see [ZHE 91] and [FEN 00]).
 Spare Parts Management 61

Maintenance policies have an effect on the spare parts demand. Frequent

preventive replacements reduce random failures but generate a waste of resources. It
seems, then, advantageous to coordinate maintenance activities and inventory
control policies. Decision models should lead to a joint determination of
maintenance and provisioning periods. Some of these models will be presented in
the following section.

5. Joint replacement and provisioning strategies

These strategies combine maintenance and provisioning policies to find an

efficient manner to performance maintenance activities with the spare parts that have
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been provisioned in consequence. Many models have been developed (e.g. [FRE 99,
ACH 86]). The strategies proposed by [CHE 01, AIT 91, AIT 00] will be presented.
A mathematical model is developed for each one of the considered strategies.

5.1. Joint spare parts provisioning and block replacement Policy (BRP)

The Block Replacement Policy (BRP) suggests using new systems to perform
replacements at failure and at predetermined instants T, 2T, ... regardless of the state
and the age of the system [BAR 65].
The model proposed by [CHE 01] combines the block replacement policy with a
(R,s) inventory review where s is the order point and R is the review period (R=kT,
k=1,2,…).
The expected cost per time unit over an infinite horizon B(T,s,R) is the sum of
the replacements, holding, order and shortage costs.

B (T , s , R )= C 1M (T ) + C h
T
 k + 1
(T ) − (t ) dt
+ ∫ 
2
M M
T T 0  2 
 + ∞
 ∞
+ h  s − ∫ xg ( x ) dx  − (h + π )s ∫ g ( x )dx
 0  S
∞
A
+ (h + π )∫ xg ( x )dx +
S
kT

A numerical procedure is developed to get the optimal strategy (T*, R* and s*)
that minimizes B(T,s,R). The results in table 3 are obtained with the following set of
data: C1 = $70, C2 = $20, h = $1, A = $50; π = $20; n = 150 units.
 62 JDS – 12/2003. Maintaining Deteriorating Systems

k T* R* = kT* s* B(T,s,R)

1 0.10 0.10 31 31475.2

2 0.10 0.20 57 31228.3

3 0.10 0.30 82 31171.5

4 0.10 0.40 107 31128.8

5 0.10 0.50 131 31128.4

k* = 6 0.10 0.60 156 31113.4

7 0.10 0.70 180 31125.7

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8 0.10 0.80 204 31118.3

15 0.10 1.50 371 31188.2

25 0.10 2.50 608 31297.3

Table 3. Optimal joint replacement strategy for items with Weibull (2,4) distributed
lifetime

5.2. Block replacement strategy for the availability maximization under resources
constraint

The proposed model seeks to determine both the preventive maintenance

strategy T and the ordering point s of the spare parts stock to be used at failure or at
the scheduled preventive replacement instants T, 2T... If, at failure, there is no spare
system, an emergency replenishment order is immediately placed and the ordered
quantity is received Te units of time later (Te < LT). Only one emergency order is
allowed within each replenishment cycle. For each replenishment cycle of length T,
a budget B is available for the inventory management operations. The optimal
couple (T, s)* is one which maximizes the system uptime ratio (or steady-state
availability) under budget constraint.
This leads to a mixed non-linear programming model that can be formulated as
follow:
Maximize
 s ∞
 ∞
Tp + Tc  M ( T ) ∫ g ( D ) dD + M ( T − Te ) ∫ g ( D ) dD  + Te ∫ g ( D ) dD
SA ( T ) =1−  0 s  s
T

subject to:
 Spare Parts Management 63

T s ∞
A
+ h ∫ (M (T )− M (t ))dt + h ∫ ( s − D ) g ( D ) dD + π ∫ g ( D ) dD ≤ B
T 0 0 s

With T ≥ 0 and s is a non-negative integer variable.

The optimal strategy (T,s)* is computed with a commercial optimization
package.

6. Conclusion

Simple and efficient procedures have been proposed to identify and to determine
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the required package of spare parts of an equipment subjected to random failure.

Many comments regarding the implementation of spare parts management system
was provided.
The factors affecting the system performance, such as: provisioning lead-time;
random demand; suppliers location, reliability and selection; the information system
effectiveness, are considered in the selected mathematical models aiming to
determine the inventory management parameters.
The integration of adequate information technology may contribute significantly
to the management system efficiency improvement (see [PAW 00, REY 00,
HUI 01]).
All management parameters and decision variables must be frequently updated
to take into account the technical, economical and strategical changes.
Many powerful computer software packages available on the market may be
helpful for an efficient inventory management system. The authors have completed a
selection procedure for such tools.

7. References

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