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Last time buy and repair decisions for spare parts

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  • Behfard, S.
  • van der Heijden, M.C.
  • Al Hanbali, A.
  • Zijm, W.H.M.

Abstract

Original Equipment Manufacturers (OEM's) of advanced capital goods often offer service contracts for system support to their customers, for which spare parts are needed. Due to technological changes, suppliers of spare parts may stop production at some point in time. As a reaction to that decision, an OEM may place a so-called Last Time Buy (LTB) order to cover demand for spare parts during the remaining service period, which may last for many years. The fact that there might be other alternative sources of supply in the next periods complicates the decision on the LTB. In this paper, we develop a heuristic method to find the near-optimal LTB quantity in presence of an imperfect repair option of the failed parts that can be returned from the field. Comparison of our method to simulation shows high approximation accuracy. Numerical experiments reveal that repair is an excellent option as alternative sourcing, even if it is more expensive than buying a new part, because of the option to postpone the repair until the parts are needed. In addition, we show the impact of other key parameters on costs and LTB quantity.

Suggested Citation

  • Behfard, S. & van der Heijden, M.C. & Al Hanbali, A. & Zijm, W.H.M., 2015. "Last time buy and repair decisions for spare parts," European Journal of Operational Research, Elsevier, vol. 244(2), pages 498-510.
    • Handle: RePEc:eee:ejores:v:244:y:2015:i:2:p:498-510
    DOI: 10.1016/j.ejor.2015.02.003
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    References listed on IDEAS

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    3. Hu, Qiwei & Chakhar, Salem & Siraj, Sajid & Labib, Ashraf, 2017. "Spare parts classification in industrial manufacturing using the dominance-based rough set approach," European Journal of Operational Research, Elsevier, vol. 262(3), pages 1136-1163.
    4. Binoy Debnath & Md Shihab Shakur & Fahmida Tanjum & M. Azizur Rahman & Ziaul Haq Adnan, 2022. "Impact of Additive Manufacturing on the Supply Chain of Aerospace Spare Parts Industry—A Review," Logistics, MDPI, vol. 6(2), pages 1-25, April.
    5. Yongquan, Sun & Xi, Chen & He, Ren & Yingchao, Jin & Quanwu, Liu, 2016. "Ordering decision-making methods on spare parts for a new aircraft fleet based on a two-sample prediction," Reliability Engineering and System Safety, Elsevier, vol. 156(C), pages 40-50.
    6. Hu, Qiwei & Boylan, John E. & Chen, Huijing & Labib, Ashraf, 2018. "OR in spare parts management: A review," European Journal of Operational Research, Elsevier, vol. 266(2), pages 395-414.
    7. Ozyoruk, Emin & Erkip, Nesim Kohen & Ararat, Çağın, 2022. "End-of-life inventory management problem: Results and insights," International Journal of Production Economics, Elsevier, vol. 243(C).
    8. Christopher A. Boone & Benjamin T. Hazen & Joseph B. Skipper & Robert E. Overstreet, 2018. "A framework for investigating optimization of service parts performance with big data," Annals of Operations Research, Springer, vol. 270(1), pages 65-74, November.
    9. Kleber, Rainer & Quariguasi Frota Neto, João & Reimann, Marc, 2023. "The role of part failure rates asymmetry and spare part proprietariness on remanufacturing decision making," European Journal of Operational Research, Elsevier, vol. 310(1), pages 185-200.
    10. Lin, Junyi & Naim, Mohamed M. & Tang, Ou, 2024. "In-house or outsourcing? The impact of remanufacturing strategies on the dynamics of component remanufacturing systems under lifecycle demand and returns," European Journal of Operational Research, Elsevier, vol. 315(3), pages 965-979.
    11. Sheikh-Zadeh, Alireza & Rossetti, Manuel D., 2020. "Classification methods for problem size reduction in spare part provisioning," International Journal of Production Economics, Elsevier, vol. 219(C), pages 99-114.
    12. Frenk, J.B.G. & Javadi, S. & Pourakbar, M. & Sezer, S.O., 2019. "An exact static solution approach for the service parts end-of-life inventory problem," European Journal of Operational Research, Elsevier, vol. 272(2), pages 496-504.
    13. Hur, Mansik & Keskin, Burcu B. & Schmidt, Charles P., 2018. "End-of-life inventory control of aircraft spare parts under performance based logistics," International Journal of Production Economics, Elsevier, vol. 204(C), pages 186-203.
    14. Behfard, S. & Al Hanbali, A. & van der Heijden, M.C. & Zijm, W.H.M., 2018. "Last Time Buy and repair decisions for fast moving parts," International Journal of Production Economics, Elsevier, vol. 197(C), pages 158-173.

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