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Spare Parts Cost Management for Long-Term Economic Sustainability: Using Fuzzy Activity Based LCC

Author

Listed:
  • Orlando Durán

    (Escuela de Ingeniería Mecánica, Pontificia Universidad Católica de Valparaíso, 2430000 Valparaíso, Chile)

  • Paulo Sergio Afonso

    (Departamento de Produção e Sistemas, Universidade do Minho, 4704-553 Braga, Portugal)

  • Paulo Andrés Durán

    (Area Mecánica, Universidad Tecnológica de Chile INACAP, 2430000 Valparaíso, Chile)

Abstract

The concept of life cycle sustainability assessment provides an interdisciplinary space to discuss the main challenges in addressing sustainability from a long-term perspective. However, uncertainty related to cost parameters constitutes one of the main challenges in LCC. This uncertainty prevents managers from precisely anticipating the exact values of important variables. These variables include the costs of spare parts inventories, which in some cases can constitute high percentages of the total cost of a product or service. We propose an activity-based costing model that handles uncertainty using triangular numbers, along with a matrix representation, and Weibull functions to incorporate the projected equipment reliability into the model. A case study based on a spare parts distribution center, which serves the mining industry in Northern Chile, is presented. The results obtained are compared with a traditional costing method. The advantage of using the proposed approach over the traditional one is evident. Future research is directed towards the implementation of a larger number of inventory policies, along with experimentation with other types of fuzzy numbers.

Suggested Citation

  • Orlando Durán & Paulo Sergio Afonso & Paulo Andrés Durán, 2019. "Spare Parts Cost Management for Long-Term Economic Sustainability: Using Fuzzy Activity Based LCC," Sustainability, MDPI, vol. 11(7), pages 1-14, March.
    • Handle: RePEc:gam:jsusta:v:11:y:2019:i:7:p:1835-:d:217451
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    References listed on IDEAS

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    Cited by:

    1. Maria-Victòria Sánchez-Rebull & Angels Niñerola & Ana-Beatriz Hernández-Lara, 2023. "After 30 Years, What Has Happened to Activity-Based Costing? A Systematic Literature Review," SAGE Open, , vol. 13(2), pages 21582440231, June.
    2. Orlando Durán & Paulo Afonso & Víctor Jiménez & Katty Carvajal, 2023. "Cost of Ownership of Spare Parts under Uncertainty: Integrating Reliability and Costs," Mathematics, MDPI, vol. 11(15), pages 1-23, July.
    3. José Edmundo de Almeida Pais & Hugo D. N. Raposo & José Torres Farinha & Antonio J. Marques Cardoso & Pedro Alexandre Marques, 2021. "Optimizing the Life Cycle of Physical Assets through an Integrated Life Cycle Assessment Method," Energies, MDPI, vol. 14(19), pages 1-24, September.
    4. Orlando Durán & Fabián Orellana & Pablo Perez & Tamara Hidalgo, 2020. "Incorporating an Asset Health Index into a Life Cycle Costing: A Proposition and Study Case," Mathematics, MDPI, vol. 8(10), pages 1-18, October.
    5. Haibing Liu & Serhat Yüksel & Hasan Dinçer, 2020. "Analyzing the Criteria of Efficient Carbon Capture and Separation Technologies for Sustainable Clean Energy Usage," Energies, MDPI, vol. 13(10), pages 1-12, May.

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