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Inventory management of spare parts in an energy company

Author

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  • Guajardo, Mario

    (Dept. of Finance and Management Science, Norwegian School of Economics and Business Administration)

  • Rönnqvist, Mikael

    (Dept. of Finance and Management Science, Norwegian School of Economics and Business Administration)

  • Halvorsen, Ann Mari

    (Statoil ASA)

  • Kallevik, Svein Inge

    (Statoil ASA)

Abstract

We address a problem of inventory management of spare parts in the context of a large energy company, producer of oil and gas. Spare parts are critical for assuring operational conditions in offshore platforms. About 200,000 different items are held in several inventory plants. The inventory system implemented at the company corresponds to a min-max system. The control parameters are decided based mainly on the expert judgment of the planners. Also, though the inventory plants can in practice be supplied from each other, the inventory planning is performed separately by the plant planners. This is because of different ownership structures where the studied company has the operative responsibility. The company is pursuing a system in which all planners conform to the same inventory management approach and evaluation, as well as being more cost efficient. Our work focuses on supporting this goal. We apply methods to decide the inventory control parameters for this system under a service level constraint. The methodology we use distinguishes unit-size and lot-size demand cases. We perform computational experiments to find control parameters for a sample of items. After the control parameters are found, we use them to explore the impact of risk pooling among the plants and inaccuracy arising from duplicate item codes.

Suggested Citation

  • Guajardo, Mario & Rönnqvist, Mikael & Halvorsen, Ann Mari & Kallevik, Svein Inge, 2012. "Inventory management of spare parts in an energy company," Discussion Papers 2012/6, Norwegian School of Economics, Department of Business and Management Science.
    • Handle: RePEc:hhs:nhhfms:2012_006
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    File URL: http://hdl.handle.net/11250/227260
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    References listed on IDEAS

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    Cited by:

    1. Usman Ali & Bashir Salah & Khawar Naeem & Abdul Salam Khan & Razaullah Khan & Catalin Iulian Pruncu & Muhammad Abas & Saadat Khan, 2020. "Improved MRO Inventory Management System in Oil and Gas Company: Increased Service Level and Reduced Average Inventory Investment," Sustainability, MDPI, vol. 12(19), pages 1-19, September.
    2. Karsten, Frank & Basten, Rob J.I., 2014. "Pooling of spare parts between multiple users: How to share the benefits?," European Journal of Operational Research, Elsevier, vol. 233(1), pages 94-104.
    3. Boliang Lin & Jiaxi Wang & Huasheng Wang & Zhongkai Wang & Jian Li & Ruixi Lin & Jie Xiao & Jianping Wu, 2017. "Inventory-transportation integrated optimization for maintenance spare parts of high-speed trains," PLOS ONE, Public Library of Science, vol. 12(5), pages 1-18, May.
    4. Mauricio Varas & Franco Basso & Armin Lüer-Villagra & Alejandro Mac Cawley & Sergio Maturana, 2019. "Managing premium wines using an $$(s - 1,s)$$ ( s - 1 , s ) inventory policy: a heuristic solution approach," Annals of Operations Research, Springer, vol. 280(1), pages 351-376, September.
    5. Wang, Wenbin & Yue, Shuai, 2015. "An inventory pooling model for spare units of critical systems that serve multi-companies," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 76(C), pages 34-44.
    6. Olde Keizer, Minou C.A. & Teunter, Ruud H. & Veldman, Jasper, 2017. "Joint condition-based maintenance and inventory optimization for systems with multiple components," European Journal of Operational Research, Elsevier, vol. 257(1), pages 209-222.
    7. Guajardo, Mario & Rönnqvist, Mikael, 2015. "Operations research models for coalition structure in collaborative logistics," European Journal of Operational Research, Elsevier, vol. 240(1), pages 147-159.
    8. Ben Jouida, Sihem & Guajardo, Mario & Klibi, Walid & Krichen, Saoussen, 2021. "Profit maximizing coalitions with shared capacities in distribution networks," European Journal of Operational Research, Elsevier, vol. 288(2), pages 480-495.
    9. Jules Raymond Kala & Didier Michael Kre & Armelle N’Guessan Gnassou & Jean Robert Kamdjoug Kala & Yves Melaine Akpablin Akpablin & Tiorna Coulibaly, 2022. "Assets management on electrical grid using Faster-RCNN," Annals of Operations Research, Springer, vol. 308(1), pages 307-320, January.
    10. VANOVERMEIRE, Christine & CUERVO, Daniel Palhazi & SÖRENSEN, Kenneth, 2013. "Estimating collaborative profits under varying partner characteristics and strategies," Working Papers 2013031, University of Antwerp, Faculty of Business and Economics.

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    More about this item

    Keywords

    Inventory of spare parts; risk pooling; duplicates; inventory inaccuracy; OR in the oil and gas sector;
    All these keywords.

    JEL classification:

    • Q00 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - General
    • Q30 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - General

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