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Production Planning & Control: The Management of

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A decision-making framework for managing

maintenance spare parts
a b b b
S. Cavalieri , M. Garetti , M. Macchi & R. Pinto
a
Dipartimento di Ingegneria Industriale , Universit degli Studi di Bergamo ,
Dalmine(Bergamo) , Italy
b
Dipartimento di Ingegneria Gestionale , Politecnico di Milano , Milano , Italy
Published online: 19 May 2008.

To cite this article: S. Cavalieri , M. Garetti , M. Macchi & R. Pinto (2008) A decision-making framework for managing
maintenance spare parts, Production Planning & Control: The Management of Operations, 19:4, 379-396, DOI:
10.1080/09537280802034471

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 Production Planning & Control
Vol. 19, No. 4, June 2008, 379396

A decision-making framework for managing maintenance spare parts

S. Cavalieria, M. Garettib, M. Macchib* and R. Pintob
a
Dipartimento di Ingegneria Industriale, Universita degli Studi di Bergamo, Dalmine(Bergamo), Italy; bDipartimento di
Ingegneria Gestionale, Politecnico di Milano, Milano, Italy
(Received 19 February 2008; final version received 3 March 2008)

Despite the huge body of academic literature on inventory management of maintenance spare parts, few
companies seem to deliberately use the proper approaches and tools for a factual and quantitative assessment.
Detaining or not stocks of a spare item, deciding upon the right level of inventory, forecasting its sporadic
consumption are just some of the evidences of the complexity and criticality underlying the daily decisions the
management of a company has to undertake. The objective of the paper is to provide a stepwise decision-making
Downloaded by [University of West Florida] at 05:03 05 October 2014

path in order to orienteer an industrial manager on how to pragmatically handle the management of maintenance
spare parts in a company. The framework is structured into five sequential steps: part coding, part classification,
part demand forecasting, stock management policy and policy test and validation. Its applicability is
demonstrated by making use of a real business case where it has been successfully adopted.
Keywords: spare parts management; maintenance management; plant maintenance; after sales logistical support;
framework; decision support

1. Introduction for specific and on-design items, can amount up to

Managing stocks of MRO (maintenance, repair,
operations) materials is an issue of utmost importance
for capital intensive companies. Unlike for materials
and components directly involved in the production
flow of new products, the expertise required for
assessing the most suitable stocking policy for a
MRO item is not merely based on a logistics and
financial background, but must also reason upon
technical and maintenance skills. As evidence, though
inventory holding cost and obsolescence risk push for a
streamlined warehouse, the prompt unavailability of a
spare part can fall out into a long and unproductive
downtime of the production/service equipment, with
direct consequences on the company profit (Sarker and
Haque 2000).
As Figure 1 shows, for unplanned breakdowns,
which are typical of a corrective maintenance policy,
the overall downtime is made of many components
that can heavily jeopardise the productivity of a plant.
Apart from the active time required for removing the
cause of the breakdown, there are specific time
components which are due to the logistics support to
the maintenance activities. Going into more details, if
the spare part is not detained, there could be an
administrative delay, in contacting and negotiating
with the supplier, and a logistic delivery time which,
several weeks or months.
However, detaining spare parts for a prompt
availability (when they are needed) can entail, in case
of expensive and rarely used parts, high inventory
holding costs.
How to find the right compromise between the two
sides of the coin? The answer is not trivial, since
usually, in a company, the financial, procurement,
logistics and maintenance departments have a different
view of the world and play their actions driven by
different and mutually conflicting objectives. The
virtuous circle would be to enable a collaborative
approach between these departments in order to decide
upon the economical convenience in detaining stocks
of a specific MRO item. As Figure 2 illustrates, the
term economical not only includes purchasing and
inventory costs, but, as a very important issue, also
takes into account those hidden costs which arise from
the unavailability of a MRO material. Since these two
curves move along an opposite direction, the definition
of the optimum level of stocks (including also the case
of no-stock) requires a thorough understanding of the
technical and economical features of each spare part.
According to Huiskonen (2001), the characteristics of
demand, criticality, value and specificity of the part are
only some of the most relevant dimensions that should

*Corresponding author. Email: marco.macchi@polimi.it

ISSN 09537287 print/ISSN 13665871 online

2008 Taylor & Francis
DOI: 10.1080/09537280802034471
http://www.informaworld.com
 380 S. Cavalieri et al.

Time to repair
(fault state duration after
occurrence of a failure)

Active repair time

Admin. Logistic Setup Diagnostic Repair Startup

delay delay time time time time

Down time (DT)

Figure 1. Typical time components of the down time of a piece of equipment.
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Costs definition of asset management including tools, spare

Total cost
Inventory
holding costs
Unavailability
costs
Stock level
Figure 2. Finding the right level of stock as a compromise
between inventory holding costs and unavailability costs.
be taken into account in order to assess the most
suitable stock management policy.
Due to its importance in the industrial practice,
planning a MRO inventory is not definitively a novel
topic in the scientific and industrial literature. A huge
body of concepts, models, methods and rules of thumb
is widely available since the 1960s, either applied in a
specific industrial context or generically established.
Given the plethora of contributions on the topic,
there were many systematic overviews and compre-
hensive surveys in the past, among which are those
provided by Guide and Srivastava (1997) and Kennedy
et al. (2002).
At a first sight, we would assume that managing
MROs is an old problem, fully investigated in the
past and no more conceivable as a concern of
industrial managers. On the contrary, a recent
industrial survey of more than 150 companies
(Aberdeen 2006) shows that companies, whose prac-
tices are significantly behind the average of the
industry, still need to break down their knowledge
departmental silos and to take a more holistic
parts, and maintenance related materials. Moreover,
managing MRO materials requires different expertise
and planning policies than those required for produc-
tion related materials. As Table 1 shows, there are
specific issues which need to be properly considered
and solved in the case of MROs.
Authors direct experience with companies reveals
that, in most of them, main issues related to spare parts
management come from a lack of organisational
consistency. As an example, which can be considered
a common evil in several enterprises, in one company
of the chemical sector a flash audit revealed that
a shared methodological path in managing MRO
stocks had never been defined. This situation induced
each of the actors, having a similar responsibility on
the stocks, to take different and inconsistent decisions.
As underlined by most of the interviewed main-
tenance consultants and managers, in many companies
there is a general underestimation of the need to
dedicate proper management policies to MROs.
Furthermore, practitioners complain about the fact
that while a lot has been written on stocking policies, a
clear and comprehensive view of the overall approach
needed for the maintenance case is still lacking.
As a result, the reason behind the authors
endeavour in writing the present paper has been to
provide a general assessment on the spare part
management problem in maintenance. The work does
not pursue the objective of making a new survey of
related literature with the proposition of models,
methodologies and tools in a structured overview. It
should rather provide a stepwise decision making path
in order to orienteer an industrial manager on how to
pragmatically handle the management of MROs in his
enterprise. Hence, the scientific base of the paper is
deliberately reduced in an attempt to make the content
 Production Planning & Control
Table 1. Issues to be considered for production versus technical materials.
Production materials
Materials are clearly identified due to their relationships
with the bill of materials and process plans of the end
products.
Variety of components normally ranges from mid to
low, except for complex bill of materials.
Purchasing costs are normally low.
Materials are characterised by a high consumption rate.
The demand forecasting horizon is large and material
consumptions are predictable in accordance to the
production volumes of the end products.
Materials can be easily sourced and their frequent
demand allow to establish collaboration relationships
with preferred suppliers, aiming at stock levels
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minimisation.
Procurement lead times are generally short.
easily understandable and the resulting guidelines
straightforwardly executable by an industrial decision
maker.
In detail, the structure of the paper is articulated in
the following sections: the proposed decision making
framework is presented synthetically in Section 2.
Section 3 provides the detailed analysis of the various
elements of the framework and Section 4 provides
an application of the framework in a real case for
demonstrating how the procedure works. Finally,
concluding remarks are contained in Section 5.
2. The decision-making framework
Though the advent of the ERP system, and more
specifically of CMMS (computerised maintenance
management systems), has favourably contributed to
the creation, archive and share of structured informa-
tion on MROs, it is common practice that the
knowledge behind their proper usage is still retained
in the human mind. Managing spare parts is not just a
technical problem which can be resolved by installing a
specific ICT tool. It rather requires an engineering
way of managing maintenance processes and, in the
specific case, of integrating the logistics and main-
tenance perspectives.
This motivates the need to organise the proposed
decision making framework into five sequential steps
(Figure 3):
(1) Part coding.
(2) Part classification.
(3) Part demand forecasting.
381
Technical materials
Materials require a specific code system.
Variety is in general high, due to specific spare parts or parts
built on order.
Some materials are characterised by low purchasing costs, but
many others are characterised by high purchasing costs (e.g. in
the case of specific or on order parts).
Materials are characterised by a low consumption rate.
In most of the cases, material consumptions are unpredictable.
Sourcing of spare parts is often limited to one or a few
suppliers.
Procurement lead times are differentiated and, in case of
specific or on order parts, they may be quite high.
Phase 1
Part coding
Phase 2
Part classification
Phase 3
Part demand forecasting
Phase 4
Stock management policy
Phase 5
Policy test and validation
Figure 3. The five decision-making steps.
(4) Stock management policy.
(5) Policy test and validation.
Phase 1 Part coding. A specific code system is to
be used for MRO materials, which is quite different
from that one adopted within a product bill of
material; the code has to provide a prompt under-
standing of the technical features of the item, the
equipment tree it refers to, the involved supplier (which
is rather important for specific and on-design parts)
and, for stocked items, their physical location in the
inventory.
 382 S. Cavalieri et al.
Phase 2 Part classification. A proper classifica-
tion of MRO materials is needed because in a
production plant, made up of different pieces of
equipment, there is a high variety of technical
materials directly or indirectly used for maintenance
and repair purposes; moreover their intrinsic technical
and economical features (criticality, specificity, value,
type of suppliers, etc.) can be highly different; as a
result, a proper classification system should give
fundamental information for establishing the correct
stocking policy.
Phase 3 Part demand forecasting. Special fore-
casting techniques are required for MROs; in fact, a
common feature of spare items is their relatively low
level of consumption; unlike materials directly used in
the production flow, a component installed in a
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machine normally requires a substitution, due to a
breakdown or a preventive maintenance, quite spor-
adically, with time intervals up to several years;
moreover the consumption rate of a spare part is
highly dependent on the number of pieces of equip-
ment where the part is installed, as well as its intrinsic
level of reliability; all these reasons explain why specific
forecasting techniques, different from the ones tradi-
tionally used for production materials, need to be
applied for MROs.
Phase 4 Stock management policy. A stock
management policy customised upon the specific
class of MRO items is required; it might range from
no-stock and on-demand policies to traditional EOQ
or ROL approaches, where materials are characterised
by a steady and continuous demand.
Phase 5 Policy test and validation. As a final
phase, test and validation of the results achieved
applying the above mentioned steps to the reality are to
be accomplished and refinement applied where
necessary.
These specific issues are evidence of the main
questions that usually arise during the decision-making
process for defining the right management policy for
MROs. Each of them will be developed in the
remainder of the paper.
3. Deployment of the various decision-making steps
3.1 Phase 1 Part coding
No particular insight will be made upon the problem of
item coding, since, in the authors experience, though
fundamental and critical, the equipment tree structures
are already embedded in most of the modern CMMS/
ERP. They provide robust and exhaustive semantics
on the technical and logistics information which are
needed for any specific item.
3.2 Phase 2 Part classification
Why is it important to perform a classification of the
MROs used in an industrial plant? There are several
reasons motivating the opportunity to devote a
substantial attention to classify materials according
to their distinctive features in the definition of the most
adequate MRO management policy.
From a financial perspective, this opportunity relies
on the need to assess which material should be
considered as a durable item (and, as a consequence,
capital investment), rather than a consumable one.
From a logistics point of view, the critical decision is
whether a material should be detained in stock or
managed on-demand. From a maintenance perspec-
tive, there is the need to guarantee the consistency
between the MRO availability and the specific main-
tenance policies applied to a plant. In particular,
coordinated decisions between preventive maintenance
policies and procurement plans are to be taken, while it
is needed to keep appropriate stock levels of spare
parts in order to reduce the effects of unexpected
failures.
MROs can be classified as follows:
. Consumables and auxiliary materials. These
are items characterised by a steady and
continuous consumption as well as having a
vast suppliers base. Examples are auxiliary
resources for equipment operations (such as
oils, filters, etc.) and maintenance activities
(suits, gauntlets, wiping rags, cleaning sup-
plies, etc.).
. Generic spare parts. These are spare parts
which can be mounted on more pieces of
equipment. Normally they are widely avail-
able on the market and retrievable on paper
or electronic catalogues; examples are
mechanical components, such as bearings,
and chains, hydraulic accessories, such as
valves and cylinders, electrical or electronic
components, such as switches, proximity
sensors, lighting.
. Specific spare parts. These are specific to a
particular piece of equipment (including also
on-design items) and/or available only
through a specific supplier; this kind of part
can be further instantiated into spare parts
whose expected wear-out time is foreseeable or
not.
. Strategic spare parts. They are specific spare
parts, whose expected wear-out time is not
foreseeable and are characterised by high
supply delivery time, relevant costs and (like
all specific spare parts) sporadic demand.
 Production Planning & Control
This empirical categorisation is based on a kind of
a priori knowledge (or expertise) of the expected
behaviour of the different types of items and can be
considered as a rough-cut method for filtering out
those items where to put more attention and emphasis
in the subsequent decision-making steps.
Consumables, auxiliary materials and, in most
cases, generic spare parts can be handled with the
same inventory policies usually adopted for production
related items. Their high-medium consumption rate,
the availability of a wide supplier base, the inter-
changeability character of parts, their low value, give
the possibility to apply traditional stock re-ordering
policies or, through specific contracts with suppliers,
rely on VMI (vendor managed inventory) or consign-
ment stock policies.
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On the contrary, specific spare parts require a
further analysis in order to evaluate the opportunity
to adopt a stock management policy or, rather, decide
their purchase on demand whenever they are
required. In particular, parts where the expected
wear-out time is foreseeable, may undergo to pre-
ventive maintenance programmes (based on a time-
based or condition monitoring approach). Their
adoption can heavily reduce the risks of prompt
unexpected breakdown and enable the maintenance
personnel to plan the type, volume and timing of
spare items needed for planned preventive mainte-
nance actions. Nonetheless, it may be needed to keep
appropriate stock levels of spares in order to reduce
the effects of unexpected breakdowns that may still
happen (with reduced probability).
For what concerns strategic spare parts, the main
issue to solve is whether is essential to put them on
stock (thus, given their high value and low consump-
tion rate, incurring in a high inventory and obsoles-
cence costs) or manage them on-demand (with the
obvious consequence of suffering higher hidden costs).
Referring to Dekker et al. (1998), who defined
criticality as the level of importance of a piece of
equipment for sustaining production in a safe and
efficient way, a classification of the equipment
criticality can be used to put evidence on the critical
spare parts which deserve more attention and are to be
kept in stock to sustain production. To practically
define criticality, two types of classification methods
are applicable: quantitative methods, implying the
adoption of drivers based on a numerical value, and
qualitative methods, assigning criticality levels based
on a rough judgment or on scoring methods. The main
approaches of spare parts criticality analysis are
summed up in Figure 4 and will be discussed in the
following paragraphs.
383
PART CRITICALITY ANALYSIS
QUANTITATIVE QUALITATIVE
METHODS METHODS
ABC FSN VED VED with scores
Figure 4. Methods for spare parts criticality analysis.
3.2.1 Quantitative methods
Quantitative methods are generally based on tradi-
tional Pareto (i.e. ABC) approaches. They range from
mono-driver-based methods, where only one classifica-
tion driver is used, to multiple-drivers-based methods,
where more drivers are combined. For example,
Schultz (2004) adopted technical variables, such as
the MTTF (mean time to failure) and MDT (mean
down time), in order to ascertain the criticality of a
spare part. MTTF and MDT are used to build up ABC
analysis and subsequently identify the spare parts
which deserve more attention since they cause either
frequent failures (low MTTF), long lasting stoppages
(high MDT) or both. Other drivers can be adopted,
such as in Dhillon (2002), where the ABC analysis
focuses on the annual demand and the annual
purchasing cost of the spare parts. These drivers
enable the identification of the level of spare parts
criticality, due to their contribution to the annual
maintenance budget. Another quantitative method can
be used, based on the analysis of the demand patterns
and leads to a different kind of classification (men-
tioned as FSN), which is focused on the moving rates
of the spare parts (Mukhopadhyay et al. 2003). The
average number of spare parts required during a
specified period is normally used in this case:
considering the replenishment lead time period, spare
parts can be classified as fast-moving F (as a rule of
thumb, a demand with more than 10 pieces/period),
slow-moving S (less than 10 pieces/period) and non-
moving N. This classification is handy when it is
desirable to put in evidence that the obsolescent spare
parts are non-moving after many years.
3.2.2 Qualitative methods
Qualitative methods try to assess the importance
of keeping spare parts in stock, based on information
on the specific usages of spares and on factors
influencing their management (costs, downtime,
storage considerations, etc). The VED classification
system is a well known qualitative method
(Mukhopadhyay et al. 2003), based on consultation
 384 S. Cavalieri et al.
with maintenance experts. According to their feedback,
spare parts are classified as vital (V), essential (E) and
desirable (D) items. Different logics can be adopted in
order to classify a spare part during a VED analysis.
For example, if the non-availability of an item inhibits
the execution of a production process and there is no
standby equipment, then the item can be defined as
Vital. If the same item is backed up by a standby unit,
then it comes into the Essential category. If the item
does not affect the process or the safety, then it is
categorised as Desirable.
Despite its apparent simplicity, structuring a VED
analysis might be a difficult task, as its accomplishment
may suffer from the subjective judgements of the users.
In order to limit the problem, VED may be combined
with a systematic procedure for classifying spare parts.
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For example, Gajpal et al. (1994) proposed a VED
classification model based on the use of the AHP
procedure (analytic hierarchic process; for details see
Saaty 1988, 1990) to limit the problem of subjective
judgments. Their VEDAHP analysis identifies three
drivers that influence the criticality of spare parts (the
type of spares required, the lead time for spare parts
procurement, and the status of availability of the
production facility when an original part fails and a
spare part is required). Three alternative values are
available for each driver:
Type of spare required
(i) standard part available from the shelf,
(ii) standard part whose availability is not certain,
(iii) non-standard part to be fabricated according
to specifications.
Procurement lead time
(i) less than 3 months;
(ii) varying from 3 to 6 months;
(iii) more than 6 months.
Availability of the production facility
(i) alternative production facility available;
(ii) alternative production facility available if
suitable modifications are made in the equip-
ment or process;
(iii) no alternative production facility available.
Finally, the criticality analysis of spare parts is
achieved through a pair-wise comparison of the three
drivers values within a team of users. The AHP results
in a compound index, which is adopted as a
comprehensive score for defining the VED classifica-
tion index.
Other qualitative methods, also based on the VED
scheme, only differ for the systematic procedure they
adopt to assign scores. For example, the BRIC
method (Cirillo 1999) combines a VED-like analysis
with a scoring method. The outcome is the evaluation
of the criticality level of production equipment. The
method assigns an integer score value from 1 (highest
importance) to 5 (lowest importance) to the following
equipment drivers: B, Breakdown effects; R, Running
(defined according to the production shifts); I,
Importance in the productive process; C, Conditions
of ageing. The comprehensive BRIC score is calcu-
lated by multiplying the four specific scores, which
results in a compound index that defines the level of
criticality of the equipment. The assumption of the
model is that spare parts belonging to critical
equipment are to be considered critical too; indeed,
the lowest BRIC scores are reached by the most
critical machines and their spare parts are assumed to
be Vital.
3.3 Phase 3 Part demand forecasting
The time series of spare parts demand can show
diversified patterns, depending upon the type of part
considered and the specific industry. Besides, demand
is characterised by a sporadic behaviour, which implies
a large proportion of zero values (i.e. in which there is
no demand at all) and a potential variability of demand
size, when it occurs. Finally, the consumption rate is
not stationary; hence the demand statistical properties
are not independent by the time.
Considering the purpose of this paper, we can
distinguish between two main classes of forecasting
techniques (Figure 5):
(1) Reliability based forecasting, to be used when
the installed base, that is the number of current
installations and their own technical operating
conditions, is known.
(2) Time series based forecasting, suitable when the
only available data are related to time series of
spare items consumption or repair records,
whilst no information about reliability of the
installed base is retrievable.
Figure 5 depicts the application framework of
forecasting techniques for spare parts management and
will be commented on in detail in the following
paragraphs.
3.3.1 Reliability based forecasting (RBF)
The main goal of reliability-based forecasting techni-
ques is to estimate the requirement for parts coming
from the installed base, during a cumulative operating
time T.
 Production Planning & Control
PART DEMAND FORECAST
RELIABILITY
FASED FORECASTING
DATA LIFE DATA EXPONENTIAL
BANKS ANALYSIS SMOOTHING AND
DERIVATIVES
Figure 5. Methods for spare parts forecasting.
Estimation can be carried out through consulting
data banks expressly devoted to collect the failure rates
of different typologies of items. Several data banks are
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on hand for the electronic, and some for the electro-
mechanical, components (IEC 61709, IRPH 2003,
MIL-HDBK-217, NSWC-98/LE1 of US Navy,
Rac Rates/PRISM, Telcordia SR-332). Based on
such data banks, the reliability of a part can be
assessed on a priori knowledge of its conditions of use,
required performance and duty cycle, through compu-
ter-aided access to data banks (Tucci 2006).
For example, the SPARTA (spare parts adviser)
software, proposed by Petrovic and Petrovic (1992),
includes a data bank of parts failure rates (lj), allowing
the calculation of the predicted failure rate (
predicted
j ,
see Equation (1)), based on users input conditions.

predicted
j m
e
nj

j 1 fitting the Weibull distribution have been developed
where the input parameters are the number m of
equipments to be maintained, the number nj of
identical parts of type j installed in each equipment
and the intensity e of the operating conditions. This
formula is useful for new plants, since previous data
from plant operation are not available and leveraging
on plant structure is only possible. The formula has
two drawbacks:
(1) The poor accordance of failure rates collected
in data banks with the real condition of use
(especially in the case of mechanical
components).
(2) The innovation rate of components and the
complexity of circuits in the case of electronic
equipment (even if more accurate models of
failure rates does exist in this case) (Tucci
2006).
In order to overcome these drawbacks, the reliability
prediction techniques may be based on the life data
analysis (LDA) of the installed base. The use of LDA
to predict the failure rate of a part (
predicted
j ) requires
385
TIMES SERIES
BASED FORECASTING
ARIMA SOFT
COMPUTING
either the history of failures registered in a CMMS or
the outcomes of reliability tests1. Based on the number
of the parts m
nj installed or tested during a time
interval of length T, the failure rate is then predicted by
counting the number NFj of statistically independent
failures which are registered in the given time period.
Different formulas for the estimation of the failure rate
are to be used, depending on the sampling plan which
has been adopted.
When a precise model is required, enabling to
identify the correct life cycle phase, among infant
mortality (decreasing lj), useful life (constant lj) or
wear out (increasing lj), the Weibull analysis is the
most popular method (Barringer 1996). It consists of a
data fitting procedure which aims at finding the
Weibull distribution that best fits the records of the
registered part failures NFj. Many techniques for
and they are available in a wide range of references
(see, for example, Lawless 2003, Murthy et al. 2004,
Sheskin 2004). The Weibull analysis can be applied
also to single components, but the high uncertainty of
data estimation and the small samples usually observed
at the component level may be a barrier for an accurate
application. The barrier can be overcome when the
data sample may be enlarged through commonality of
components among more pieces of equipment and/or a
large installed base.
3.3.2 Time-series-based forecasting (TBF)
Time-series-based forecasting techniques can be used
in the spare parts context for estimating the overall
distribution of demand over the supplier lead time (the
so-called lead time demand, LTD, Willemain et al.
2004). Unlike RBF, the demand estimation using TBF
is based only on the orders that are issued for a spare
part and no knowledge is required over the dimension
and operating conditions of the installed base. This
way, based on orders data taken from historical
records available in ERP, primary factors influencing
 386 S. Cavalieri et al.

the demand, such as the mean value and variance of

the demand and of the supplier lead time, can be
1.32
evaluated (Williams 1984).
However, a frequent issue with slow-moving items is
that there is poor or no historical data. As already
mentioned, traditional forecasting approaches are not ERRATIC BUT NOT
LUMPY DEMAND
VERY INTERMITTENT
really suitable in the spare parts context. This is due to the
presence of many zero values and to the extreme variance
of the demand size. Nevertheless, many organisations in CV2 0.49
the manufacturing and, especially, in the service indus-
tries simply use single exponential smoothing. However,
as was first shown by Croston (1972), this generally leads INTERMITTENT BUT
SMOOTH DEMAND
to inappropriate stock levels, since forecasts are generally NOT VERY ERRATIC

low-biased just before a demand occurs and high-biased

just afterwards, resulting in excessive stock levels.
Henceforth, a spare parts time series requires a forecast-
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ing technique that allows for the possibility of zero values
(Teunter and Sani 2006, Snyder 2002).
Describing the patterns of low demand spare
parts (i.e. with zero values) for forecasting purposes,
the terms erratic, intermittent and lumpy are often
used as synonyms. A better specification of these
terms can be made by introducing two explicit
measures of the demand patterns (Ghobbar and
Friend 2002):
(1) The average time between two consecutive
orders of the same part, evaluated through
the ADI coefficient (Equation (2)).
(2) The variation of the demand size, evaluated
through the square of the coefficient of varia-
tion CV (Equation (3)):
n0
ADI
T Nonetheless, we can state that all available time-
q series-based forecasting methods (i.e. simple exponen-
P  

2
i2T^ di  d =card T
CV
d

where n0 is the number of periods with no
demand, di is the demand on period i, d
is the
mean demand and T^ is the set containing all the
periods with demand (periods with no demand
are excluded from the calculation of CV, since
the presence or absence of demand is given by
the ADI).
Depending on the values of the square of the
coefficient of variation CV (i.e. CV2) and ADI,
demand patterns can be classified into four categories:
(1) Smooth demand, which occurs randomly with
few time periods with no demand and with
modest variation in the demand size.
(2) Intermittent demand, which appears randomly
with many time periods having no demand.
ADI
Figure 6. Classification of demand patterns (Ghobbar and
Friend 2002).
(3) Erratic demand, which is highly variable in the
demand size.
(4) Lumpy demand, which likewise seems random
with many time periods having no demand and,
in addition, demand, when it occurs, is highly
variable.
Cut-off values for the two indicators are provided in
Figure 6 according to Ghobbar and Friend (2002) and
Syntetos (2001).
A clear definition of which forecasting method is
more suited for the demand type of each quadrant of
2 the classification matrix of Figure 6 is not easy.
^
tial smoothing and derivatives, ARMA models) are
3
suitable for the smooth demand and the erratic
demand quadrants. On the other hand, more custo-
mised models should be adopted for the intermittent
demand and lumpy demand quadrants. Interested
readers can find good references in the Croston and
modified Croston methods (Croston 1972, Boylan and
Syntetos 2006). Also other derivatives of the Croston
method (see, for example, Shenstone and Hyndman
2003) or the method based on the Markov Chain,
combined with bootstrapping procedure (Willemain
et al. 2004), can be considered.
3.4 Phase 4 Stock management policy
Stock sizing is the focal point for the definition of spare
parts management policy: based on an inventory
model (implementing a stock management policy or,
 Production Planning & Control
briefly, a stocking policy), it defines the stock size in
each warehouse for those items that is advisable to
detain.
If we look at the general scope of stock sizing
this can be summarised as: to find the smallest
integer number of spare parts which must be
stocked, so that requirement for parts from the
installed base, during a cumulative operating time T,
is met with a minimum probability R (Birolini
2004).
An inventory model is composed by two main
parameters:
(1) A criterion (x) that specifies the conditions
under which a new order of spare parts should
be issued.
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(2) A reference point (y) for the quantity to be
ordered.
Inventory models (or stock management policies)
can be classified with the couple (x, y), where both x
and y can assume different values depending upon the
type (continuous or periodic) of inventory review
(i.e. the re-order criterion) and the optimal order size.
For our concern, we mainly refer to four inventory
models:
(1) The continuous review, with fixed reorder point
(r) and fixed order quantity (Q), referred to as
(Q, r).
(2) The continuous review, with fixed re-order
point (s) and order-up-to level (S), referred to
as (s, S).
(3) The periodic review, with fixed ordering inter-
val (T) and order-up-to level (R), referred to as
(T, R).
(4) The continuous review and order-up-to level
(S) in a one-for-one replenishment mode,
referred to as (S  1, S).
The periodic system is generally preferred in spare
parts management because of the convenience of
regular ordering days for the stockist and for the
supplier, who can plan efficient routing of delivery
vehicles. The (s, S) inventory control system has been
claimed theoretically to be the best for the management
of low and intermittent demand items (Sani and
Kingsman 1997). Since stock management policies
determine the capital investment in spares and, at the
same time, the expectations in down time costs, the
related decisions should be as accurate as possible.
However, as already said, although there is a huge
body of academic literature on stocking policies, few
companies seem to apply them thoroughly. There are
some primary reasons which prevent from their
application.
387
. One reason is that specific models have been
proposed in many case studies, mainly based
on a set of rules and algorithms tailored for
the single case. As an example of this kind of
approach, special applications in many sectors
are reported in the references, such as com-
puters (Ashayeri et al. 1996), airlines (Tedone
1989), bus fleets (Singh et al. 1980), power
generation (Bailey and Helms 2007) and the
military (Rustenburg et al. 2001). Being
industry-specific, the portability of these
models to other industrial settings is poor.
. Another reason is the mathematical complex-
ity that characterises, in some cases, the
resolution of the models, whilst the implemen-
tation of simple models by using spreadsheets
may give interesting results, in many cases.
. A further important reason that prevents
the wide adoption of stocking policies is the
lacking of a clear application grid of the
different stocking policies with an unambig-
uous understanding of the assumption, start-
ing hypothesis, area of application (in terms of
classes of items) and expected results (in terms
of inventory or hidden costs).
By referring to such a guideline, the practitioner could
easily guess which approach turns out to be more
suitable for his/her specific needs. To this concern,
which drivers enable the selection of the best model
fitting a specific problem domain?
The demand pattern is undoubtedly one of the
most important and critical drivers that should be
considered when selecting the correct stock sizing
model. As a starting point, a distinction between
deterministic and stochastic demand is necessary
(Gerosa et al. 2006). Other empirical classification
methods, such as the FSN mentioned in Section 3.2.1,
can be used to identify models for slow and fast
moving parts (Mukhopadhyay et al. 2003).
Another important characteristic to be considered is
the repairability of items. Repairable parts are remark-
ably more complex to investigate than non-repairable
ones, since the stock-sizing decisions depend also on the
returning flows for refurbishment or reconditioning of the
faulty parts and the availability of one (or more) repair
crew(s) to do the job (Guide and Srivastava 1997).
Eventually, the level of centralisation/decentralisa-
tion of the logistical support has to be considered: in a
multi-level network (generally referred to as multi-
echelon network) the stocks may be kept either in one
site (centralised logistical support), in different loca-
tions of the installed base (decentralised logistical
support) or in a mix of locations.
 388 S. Cavalieri et al.
STOCK SIZING
DEMAND REPAIRABILITY
STOCHASTIC DETERMINISTIC NON
DEMAND DEMAND REPAIRABLE
SPARE PARTS
Figure 7. Classification and selection drivers of stock sizing models.
Henceforth, decisions related to inventory man-
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agement results from the combination of three
different drivers: demand, repairability and centralisa-
tion/decentralisation. The resulting selection tree
(reported in Figure 7) will be used in the following
to support the selection of the proper stock sizing
model, according to the characteristics (or features) of
the given domain.
3.4.1 Stock sizing for stochastic demand with
non-repairable items
Most commonly, the assumption of a constant failure
rate is adopted for stock sizing. This means that the
part is assumed to fail within its useful life cycle phase,
where its failure rate l can be assumed as constant (this
means that its reliability function is exponentially
distributed or, equivalently, the repair orders occur
according to the Poisson distribution).
The Poisson distribution can be adopted as a good
approximation for the stock sizing of spare parts
when the demand rate in a period T is not very high.
The Poisson equation assumes that d
T is not a very
large number (Jardine and Tsang 2006). In practice,
this situation is valid for the slow moving parts.
Applying the Poisson distribution, a stock size S to be
kept can be calculated, based on a target level of fill
rate (i.e. the probability of not running out of stock
when a failure occurs). Equation (4) expresses the
Poisson model.
X
S1
d
Ti
Pr f1


n > Tg
ed
T  R 4
i0
i!
where  1, . . . ,  n represent the times to each failure (until
the nth) and are assumed to be independent positive
random variables and normally assumed to be distributed
according to an exponential distribution function or,
equivalently, to a constant failure rate; d is the demand
CENTRALISATION/
DECENTRALISATION
REPAIRABLE CENTRALISED DECENTRALISED
SPARE PARTS LOGISTICAL LOGISTICAL
SUPPORT SUPPORT
rate per unit period and it is estimated according either to
a reliability based or a time series based forecasting (see
previously in Section 3.3); T expresses the time interval
taken as a reference for the target fill rate.
Given a predefined fill rate, the model can be used in
two ways:
(1) For calculating the number of items to stock
over a fixed planning horizon, i.e. the total
number of spares S needed during the planning
horizon T (see, for example, Jardine and Tsang
2006, where the number of non-repairable
spares to be acquired over a 5-year planning
horizon is calculated).
(2) For calculating the number of items to stock
over a replenishment lead time, i.e. the stock
size S of a one for one replenishment
(S  1, S) policy, such that the demand may
be directly fulfilled from stock on hand (at the
target fill rate) during the replenishment lead
time T.
The use of the Poisson distribution in the context of a
one-for-one replenishment mode (S  1, S, see above)
for non-repairable items is a typical application.
For example, Dekker et al. (1998) proposed a model
to size stocks which provide service differentiation
(i.e. identical spares are installed in similar machines,
but they have different criticalities from the production
process point of view).
3.4.2 Stock sizing for stochastic demand with
repairable items
Alike the case of non-repairable items, the assumption
of constant failure rates is the most commonly adopted
in practice also for stock sizing with repairable
items (Jardine and Tsang 2006). Following this
approach, the same Poisson formula is adopted
(Equation (4)); though data fed in the model may
 Production Planning & Control
have a different source. In fact, the replenishment time
T represents the time to repair, which is characterised
by a constant value, since it is assumed not to have
upper boundaries on the number of repairs that can be
simultaneously performed (infinite repair capacity).
Nonetheless, the stock sizing models for repairable
items are sometimes more complicated, since diverse
issues, related to the repair activities, should be
included. Supposing the case of a single site context,
two important decisions might be on hand:
(1) The replacement by new items, when the
repairable items are worn beyond recovery, so
that they cannot be repaired any more and have
to be condemned.
(2) The finite repair capacity of the repair shop.
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For case (1), the stock sizing models focus on the
optimal replacement policies: a stocking policy to
replace the condemned items has to be identified.
Application examples can be found in Muckstadt and
Isaac (1981), seeking to minimise backorders in a
system with an optimal fixed order quantity (Q, r) or in
Schaefer (1989), deriving an optimal continuous
review-fixed reorder point-order up to level policy
(s, S), to minimize the expected ordering, holding and
shortage costs. For case (2), the decision requires one
to solve the classic machine repair problem in queuing
theory or its variants. For example, Balana et al. (1989)
determine the optimal stock sizes of spares and repair
channels by considering a finite source queue and finite
repair channels. Ebeling (1991) adopts a queuing
approach (M/M/s finite population queue) to deter-
mine the optimal allocation of stock sizes and repair
channels. In this case, the queuing approach is
combined with dynamic programming (DP), to allo-
cate a fixed budget among the multiple items and
maximise system availability.
3.4.3 Stock sizing for deterministic demand with
repairable and non repairable items
Deterministic demand is a particular demand, that is
almost valid only for very specific management
situations, such as for few generic or consumable
items (e.g. fast moving consumable items) with regular
demand volumes. The models can be considered as
modifications of existing models for inventory manage-
ment in manufacturing, in order to take into account
the specificity of spare parts management. One
example is the extension of the EOQ model for fast
moving parts undergoing to the risk of unexpected
obsolescence (Cobbaert and Van Oudheusden 1996).
Another example is the modified EOQ model to
account for multiple items that share a common and
389
limited repair capacity (Mabini et al. 1992). The stock
sizing models for deterministic demand will not be
discussed in this paper, as plenty of references can be
found in literature (see, for example, the survey of
Gerosa et al. 2006 or Guide and Srivastava 1997, for
the case of repairable items).
3.4.4 Stock sizing for centralised/decentralised
logistical support
On a wider supply network perspective, spare parts can
be stocked at different inventory holding points (IHPs)
that might belong to different levels (usually referred to
as echelons) of the network, where the higher
echelons supply the lower echelons. Also in this
context, spare parts are classified into two main
categories: repairable and non-repairable (Al-Rifai
and Rossetti 2007).
Depending upon the existing relationships between
IHPs, the resulting supply network can be of the
centralised or decentralised type. The former case
occurs when each location of the supply network is
owned by different owners who do not delegate the
control of their inventories to external parties. In this
case, each owner self constrains to build one stock in
its own site without considering the potentials achiev-
able from interactions between sites. The latter is a
possible option of the owner of a multi-site context,
who might decide the best choice between centralising
stocks at one or more central sites or decentralising
stocks at sites located at lower echelons.
Previous research shows that tremendous improve-
ments are attainable if a centralised inventory manage-
ment system is considered for the entire supply
network. This motivated building special inventory
models that consider the entire supply network and the
interactions between their constituent IHPs (Al-Rifai
and Rossetti 2007). Indeed, one of the reasons to have
a multi-echelon structure is the need for both local
stocks to be close to the customers sites (for fast
supply) and for stock centralisation (for reducing the
holding cost). An investigation made by Cohen et al.
(1997) reported that three-echelon networks were
prevalent in the sample (though the middle echelon
was mainly dedicated to making emergency shipments
only), followed by two-echelon systems. Four-echelon
networks occur rarely in practice.
The typical multi-echelon models, available from
literature, are of the two-level system (see Nahmias and
Smith 1992, Federgruen 1993). In this case, a number of
sites close to customers clusters are considered, being
replenished by one or more higher level depots; the
demand of a spare part (either repairable or non-
repairable) at a decentralised site is supposed to be
 390 S. Cavalieri et al.
satisfied by the stock retained into the site; at the same
time, depending upon the inventory model adopted
(selected amongst those already presented), a replenish-
ment order can be issued towards the supplier in case of
non-repairable items, while in case of repairable items the
components (or a batch of them) are sent to the depot for
repair activities. Indeed, most of the multi-echelon models
adopt an (S  1, S) stocking policy at each echelon, in
case of repairable items. Anyhow, different variants of
other stocking policies, based on continuous review or
periodic reviews and order quantities, can be found (see
the survey of Guide and Srivastava 1997).
Summarising, a first decision key in the design of
multi-echelon inventory systems is the determination of
the proper stock level of spare items at each echelon. In
the simplest form, the problem consists in two main steps:
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(1) Setting the inventory levels at each decentra-
lised site (including also the case of no-stock),
such that a pre-specified level of service is
achieved during a cumulative operating time T.
(2) Comparing the decentralised against the cen-
tralised storage, with the assumption of the
same pre-specified level of service during the
cumulative operating time T (Birolini 2004).
Nonetheless, stock sizing models are normally
complicated by the inclusion of diverse issues, related
to supply networks, such as transportation times and
financial constraints, or related to some character of
repairable items, such as when the repairable parts are
worn out beyond recovery and condemnation has to be
considered. The case of non-repairable items is
equivalent to the repairable case where condemnation
is equal to 100%. Additional complications may arise
when the possibility to have transfer units between
stock bases is taken into account to satisfy demand (the
transhipment problem). Cannibalisation, re-distribu-
tion of repaired units among the stock bases, capacity
constraints of the repair facilities, batching of repair
and replenishment quantities and other factors can
also be considered (Guide and Srivastava 1997).
The reader may refer to the above-mentioned
surveys for further readings. The following points can
be summarised as a guideline to the matter:
(1) The well-known METRIC model (multi-eche-
lon technique for recoverable item control),
developed by Sherbrooke (1968), was the first
practical application of multi-echelon theory.
(2) Several extensions and modifications of the
METRIC model have been proposed since then
(just as a few examples see Graves 1985,
Sherbrooke 1986, Daz and Fu 1997, Caglar
et al. 2004).
3.5 Phase 5 Policy test and validation
Before putting in practice all the results of the previous
phases of the decision-making framework, tests using a
discrete-event simulation may be carried out to make
sure that the selected policy is the most suitable one.
Discrete-event simulation is a technique that is used to
model real world complex systems in order to analyse
their behaviour under assigned operating conditions.
In Dekker et al. (1998), simulation is adopted to verify
the service level in a system, where stocks were
established based on a critical-level policy by means
of analytic approximation. The critical level policy is
tested in three real scenarios, with different rules
handling the incoming orders.
Plenty of similar case studies can be mentioned. For
example, de Smidt-Destombes et al. (2006) reported
the analysis of the combined influence of different
control variables (i.e. the conditions to initiate a
maintenance task, the spare parts inventory levels,
the repair capacity and repair job priority settings) on
the availability of a k-out-of-n system with deteriorat-
ing components and hot standby redundancy. Zohrul
Kabir and Farash (1996) and Sarker and Haque (2000)
studied the influence of a set of parameters (i.e. item
replacement, shortage and inventory holding costs,
item failure characteristics, distribution of the order
lead time) on a jointly optimal age replacement and
spare parts provisioning policy.
Due to the flexibility of simulation modelling,
verification of policies, by means of simulation, can be
considered a generalised approach. Indeed, any variety
of decisions mix can be tested by simulating practical
scenarios in the context of the problem (centralised/
decentralised, with finite or infinite repair capacity,
etc.). It is also worth pointing out that simulation
allows the adoption of any given demand pattern, as
required by the problem set.
Simulation can be used not only for policy
verification, but also to find an optimal one. In this
case, the solution to the stock sizing problem can be
searched by a hybrid approach, combining the discrete-
event simulation model with an intelligent search
procedure (normally built over soft computing techni-
ques). For example, Marseguerra et al. (2005) pro-
posed simulation to decide the optimal number of
spare parts required by a multi-component system.
They modelled system failures plus repair and replace-
ment stochastic processes by means of simulation with
Monte Carlo random generation of failures. A multiple
objective function (i.e. the maximisation of system
revenues and the minimisation of the number of spare
parts) was defined to find out how many spares should
be kept in inventory for each type of component.
 Production Planning & Control 391

A genetic algorithm (GA) was used to adhere to the
multi-objective optimisation. Similar hybrid
approaches (combing simulation and soft computing)
used in commercial software solutions are available on
the market (e.g. the SPAR modelling environment;
Clockwork Solutions 2007).
For a comprehensive general overview on simula-
tion, see Law and Kelton (2000); for the application of
simulation to spare parts management, see Dubi (2000).
4. An industrial case study
The previous sections have provided a detailed over-
view of the main steps to be followed for applying the
proposed decision making framework. The five deci-
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A unique ERP system has been introduced in all
the plants by a few years, thus facilitating an
effective communication, planning and control
across the various plants at the business level. In
particular, easier performance analysis and control
activities are carried out by the Technology
Management Centre (TMC), a central organisational
unit operating within the headquarters of the
company. The decision-making process, reported in
the remainder, has to be considered as part of the
analysis and decision process carried out in the TMC
to fix the spare parts management policy; in
particular, how many spare parts to keep in stock
and which stocking policy to adopt in the multi-site
context had to be decided.

sion-making steps are reported in Figure 8, drilling

down the main intermediate results as well as the
methods adopted to achieve them.
In this section, an industrial case study will be
illustrated for providing the reader with a practical
example of how the five decision-making steps should
be consistently followed. The case study concerns
Heavy Industries (a fictitious name of the company),
operating in the process industry. Heavy Industries are
implementing a centralised spare parts management
system in a multi site context, where 17 different plants
are distributed over a wide geographic area.
4.1 The decision-making framework in practice
Phase 1 Part coding
The parts were already coded accordingly in the
company and no special work was required for this
first step.
Phase 2 Part classification
A rough criticality analysis initially served to identify
the kind of items to be considered strategic from the
point of view of maintenance management. Out of
these items, the large electrical motors used for

Methods Decision making phase Results

Equipment trees and part codes, including main Phase 1

technical and management features of the item Part code
Part coding

A priori knowledge (for rough-cut classification), plus

Rough-cut classification
quantitative or qualitative part criticality analysis Phase 2
Part classification Part criticality analysis

Reliability based forecasting (RBF) or time series Phase 3

based forecasting (TBF) Part demand forecasts
Part demand forecasting

Drivers of the domain under analysis (demand,

repairability, centralisation/decentralisation) for the Phase 4
selection and application of (x, y) inventory models Stock management policy Stock sizing

Drivers of the domain under analysis (demand,

repairability, centralisation/decentralisation) for the Phase 5
definition of simulated scenarios Policy test and validation Policy verification

Figure 8. Overview of the decision-making steps, main methods used and intermediate results when using the proposed
framework.
 392 S. Cavalieri et al.
Methods
Not done: part code system inherited from the
company system
Criticality analysis by quantitative methods FSN/VED
for rough criticality analysis, plus ABC for detailed
analysis
Reliability based forecasting (RBF) starting from the
knowledge of the installed base and its life data
analysis (LDA)
Use of the (S 1,S) inventory model taking into
account as drivers: hard constraints for stocking in
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central (regional) IHPs; constant time to repair for
repairable items and stochastic demand (using the
Poisson formula, see Equation (4)).
Definition of simulation scenarios assuming as
drivers: hard constraints for stocking in central Policy test and validation
(regional) IHPs; constant time to repair for the
repairable items and stochastic demand (i.e. Poisson)
Figure 9. Decision making framework and methodological drivers in the use case.
powering heavy mechanical machinery were consid-
ered (grouped in accordance to technical features in
13 different families). Large motors are spare parts of
slow moving type (according to a FSN classification);
in accordance to the VED analysis, they can be
considered as Vital, being installed in primary lines of
the production processes (whose unavailability leads
to production capacity reduction, entailing high
hidden costs). A detailed criticality analysis was
carried out afterwards, for a better understanding of
the priorities to take into account. This criticality
analysis aimed at identifying the types (families) of
electrical motors deserving more attention. This was
achieved by applying a quantitative method, i.e. using
a Pareto ABC and merging two drivers (the unit
purchasing costs and the number of installations),
according to their alignment to the plant operations
strategy. Only three families of motors went out as
critical, over the 13 families of large motors installed
in the company.
Phase 3 Part demand forecasting
The demand requirement for spares is estimated
considering constant failure rates and the number of
installed motors (assuming comparable operating
conditions across the different sites). This is equivalent
to assume that
predicted
j m
e
nj

j (i.e. the failure
rate of family j, depends only on the number of
installed motors m
nj).
Decision making phase Results
Phase 1
Part coding
Rough-cut classification
Phase 2
Part classification Part criticality analysis
Phase 3
Part demand forecasting Part demand forecast
Phase 4
Stock management policy Stock sizing
Phase 5
Policy verification
These assumptions were considered reasonable for
different reasons:
(1) The motors are characterised by similar tech-
nical features (pertain to different, but similar
families).
(2) Their process loads are comparable (the motors
are the driving engines of the same type of
machinery, even of different size or type).
(3) They are subject to standardised maintenance
operations (i.e. standard rules for general
revisions/overhauls and for end of life manage-
ment are applied).
Thereafter, an analysis of the historical records
available in the ERP led to the estimation of the
predicted failure rate according to a life data analysis
method (namely a maximum likelihood point estimate
to predict
predicted
j ). A rough comparison of the rates
observed in different sites confirmed the assumption of
the independence from production sites. In this
particular case, no further study was performed to
validate the assumption of constant failure rates
(a Weibull analysis would have been a valuable
option to this end).
Phase 4 Stock management policy
The hard constraints of the maintenance and finance
organisations were considered before getting to the
stock management policy definition. The first
 Production Planning & Control
constraint concerned the presence of repair shops,
close only to some of the 17 production sites. In view
of that, the enterprise management identified a few
plants (closer to repair shops) as responsible for
co-ordinating the relationship with third parties, for
the whole group. Stock ownership was subsequent to
this organisational decision. It is worth noting that
the repair capacity is not controlled by the company,
since it is carried out by third parties. This led to the
hypothesis of constant repair lead times that were
calculated as the average times observed in the past
for repair orders.
The second constraint was of a financial nature: the
centralised solution, involving minimal financial
expenses, was selected as a choice, with a
centralisation scheme at regional level. As a conse-
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quence, the seventeen sites were divided as belonging to
three different regions (north, centre and south), where
centralised depots were provided. A Poisson formula
was then used to define the initial stock sizing for the
three centres, considering the demand rate from the
installed base in each of the regions and the MTTR,
fixed as constant replenishment time (coming from the
third parties).
Phase 5 Policy test and validation
The last step concerned the verification, by means of
discrete-event simulation, of the initial value of stock
sizing. This was done assuming a (S  1, S) stocking
policy (due to the slow moving character of the items
under concern) and a failure generation rate accord-
ing to an exponential distribution (equivalent of
having constant failure rates from every site). The
stock unreliability (number of stock-outs when a
failure occurs) was measured by simulation to
evaluate the effect of an increased level of stock to
reduce stock unreliability. The stock downtime (due
to shortage of the spare parts) was also tested at any
stock level, to verify the effect of relocation. Three
central stocks, each one being the centre of gravity of
the matrix of distances for any region (north, centre,
south), were identified for the relocation.
5. Conclusions and managerial implications
In the management of maintenance spare parts a gap
still exists between what has been largely investigated
and proposed in the scientific literature and the
lagging industrial practices. The authors attempt in
writing this paper has been to try to overcome it,
proposing a decision-making framework for support-
ing the MROs management problem. The application
of the framework to an industrial case study has
393
shown the methodological path for leading the
analysis in the correct way and subsequent decisions
to be taken in practice. Besides its use as a practical
procedure to deal with the problem on hand, the
authors believe that the framework can be considered
also as a base ground for the future development of a
computer-aided tool for going through the whole path
of the decision making process. Using such a software
solution, the industrial user may be capable of
selecting the proper tools to apply for the problem
domain under his/her ownership. This may finally
lead to fulfilling the gap existing between the low level
of usage in industry of tools to manage spare parts
based on a factual and quantitative assessment and
the huge body of models available from literature. To
this end, literature references provided through the
paper can be considered, in the authors opinion, as
the most promising models and methods to be
adopted in such a tool.
Notes on contributors
Marco Macchi is a researcher at
Politecnico di Milano. Currently, he
is a teacher of modelling of produc-
tion systems, laboratory of production
systems and logistics, design of pro-
duction plants. He is also a lecturer of
maintenance management, operations
management and automated produc-
tion systems, Vice Director of the
Executive Master on maintenance management, lecturer of
methods of modelling and simulation in the context of the
PhD course in Ingegneria Gestionale. He is author or co-
author of two books and more than 60 papers, published
nationally and internationally. His research interests are
maintenance management, production system engineering
and automation, industrial production management.
Marco Garetti is full professor of
Industrial Technology at Politecnico
di Milano. Currently he teaches main-
tenance management, production
management and design and manage-
ment of production systems, also he is
director of the Executive Master on
maintenance management. He started
work at Alfa Romeo cars, then joined
Politecnico di Milano in 1974. He is member of IFIP, of
IFAC and member of the editorial board of the International
Journal of PLM (Elsevier) and of Production Planning &
Control (Taylor & Francis). Furthermore he is the chairman
of the Scientific Committee of the Italian Maintenance
Association. He is author or co-author of seven books and
more than 100 papers. His research scope is based on
maintenance management, production system engineering
and automation, industrial production management and
 394 S. Cavalieri et al.
integrated product and process design. Born in 1946, he
achieved his degree in Mechanical Engineering at Politecnico
di Milano in 1971. Married with two sons, he likes to spend
his free time in motor biking, sailing, skiing and travelling.
Sergio Cavalieri is Associate Professor
of Operations and Supply Chain
Management at the University of
Bergamo. Over the last few years his
main research interests have been
mainly devoted to the industrial service
management area. He is currently
co-ordinator of an Italian joint indus-
try-academic after sales service
management forum and co-director of a post-graduate
Master on Industrial Asset Management. He has written
four books and more than 70 papers, published in national
and international journals or presented in conference
proceedings. He is member of IFAC TC 5.1 on
Downloaded by [University of West Florida] at 05:03 05 October 2014
Advanced Manufacturing Technology, member of the
Technical Development Steering Committee of the Supply
Chain Council, former co-ordinator of a SIG within the IMS
(Intelligent Manufacturing Systems) Network of Excellence
and associated member of EUROMA and POMS.
Roberto Pinto is a research fellow at
the Politecnico di Milano and a
doctoral candidate at the University
of Brescia. He graduated in
Management Engineering from the
Politecnico di Milano, and his current
research interests focus on the logistics
and supply chain management area,
with specific activities devoted to the
spare parts management field. He also collaborates
in research activities and projects with the University
of Bergamo, where he is contract professor for logistics
courses.
Note
1. Based on the failure rate, the predicted mean time to
failure can be directly calculated as MTTFpredicted
j 6977.
1=
predicted
j , when
predicted
j is constant.
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