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Inventory management of spare parts in an energy company

Author

Listed:
  • Mario Guajardo

    (NHH Norwegian School of Economics, Bergen, Norway)

  • Mikael Rönnqvist

    (NHH Norwegian School of Economics, Bergen, Norway)

  • Ann Mari Halvorsen

    (Statoil ASA, Sandsli, Norway)

  • Svein Inge Kallevik

    (Statoil ASA, Sandsli, Norway)

Abstract

We address the problem of how to determine control parameters for the inventory of spare parts of an energy company. The prevailing policy is based on an (s, S) system subject to a fill rate constraint. The parameters are decided based mainly on the expert judgment of the planners at different plants. The company is pursuing to conform all planners to the same approach, and to be more cost efficient. Our work focuses on supporting these goals. We test seven demand models using real-world data for about 21 000 items. We find that significant differences in cost and service level may appear from using one or another model. We propose a decision rule to select an appropriate model. Our approach allows us to recommend control parameters for 97.9% of the items. We also explore the impact of pooling inventory for different demand sources and the inaccuracy arising from duplicate item codes.

Suggested Citation

  • Mario Guajardo & Mikael Rönnqvist & Ann Mari Halvorsen & Svein Inge Kallevik, 2015. "Inventory management of spare parts in an energy company," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 66(2), pages 331-341, February.
    • Handle: RePEc:pal:jorsoc:v:66:y:2015:i:2:p:331-341
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    1. Sridhar Bashyam & Michael C. Fu, 1998. "Optimization of (s, S) Inventory Systems with Random Lead Times and a Service Level Constraint," Management Science, INFORMS, vol. 44(12-Part-2), pages 243-256, December.
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    6. Morris A. Cohen & Paul R. Kleindorfer & Hau L. Lee, 1988. "Service Constrained (s, S) Inventory Systems with Priority Demand Classes and Lost Sales," Management Science, INFORMS, vol. 34(4), pages 482-499, April.
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    Cited by:

    1. 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.
    2. 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.
    3. 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.
    4. 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.
    5. 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.
    6. 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.
    7. 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.
    8. Yonit Barron & Chananel Benshimol, 2024. "Emergency Supply Alternatives for a Storage Facility of a Repairable Multi-Component System," Mathematics, MDPI, vol. 12(17), pages 1-33, August.
    9. 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.
    10. 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.
    11. 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.

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    More about this item

    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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