Using BlockSim 6 for Planning Just-In-Time Ordering of Spare Parts
Just-in-time (also known as lean production or stockless production) is an inventory strategy that aims to reduce operation costs by reducing carried inventory and its associated cost. Inventory of spare parts is necessary to maintain operations and avoid long downtime, but can also be a major expense. Modern business thinking views inventory as incurring costs instead of adding value. Lean business tries to eliminate inventory that does not add value to the product. The just-in-time (JIT) philosophy is about having the right part at the right time, at the right place and in the sufficient amount. Good predictive and statistical analysis can transform inventory from a burden to a lifesaver.
Just-in-time ordering of spare parts provides many benefits, such as:
This article presents methods of using BlockSim 6 for comparing different inventory policies to achieve a JIT inventory strategy based on the understanding of the repair and spare parts needs for supporting an operation.
Figure 1 - RBD for a simple operation
The next table lists the failure and the repair distributions of the different blocks in the above RBD. (Blocks can represent parts, equipment, subsystems, etc.)
Table 1 - Failure and Repair distributions for the different blocks in Figure 1
The following figures show how the failure and the repair distributions can be set for a block in BlockSim 6.
Figure 2 - Entering the failure distribution and repair distribution for a block
In order to evaluate an inventory strategy, we need to consider the costs of maintaining spare parts in the inventory. The costs associated with each type of part include the direct cost per item of the part; the indirect cost, or cost per item per unit time of maintaining each part in the inventory; and the cost of obtaining an emergency spare part if none is present in the inventory. In this example, we use the following costs.
Table 2 - Breakdown of costs of maintaining the inventory of spare parts
Planning the optimum inventory strategy is a very difficult mathematical and managerial problem. It is a very rich area of Operations Research and inventory problems could range in difficulty from easy to intractable or unsolvable. Simulation can be a very adequate and simple approach to evaluate different inventory strategies and to assist in the planning of a "close to optimum" strategy without spending a great deal of effort and time using advanced analytical stochastic calculations (which might demand a high level of expertise) to determine the "optimum" inventory strategy.
2- Estimating the Required Number of Parts
Figure 3 - Simulation settings to simulate 3 years of system operation
After running the simulation, we can obtain many results, reports and plots in BlockSim 6. For example, the System Overview report, shown in Figure 4, can be obtained by clicking the Details button in the Maintainability/Availability Simulation console shown in Figure 3 (which becomes available after you have run the simulation). This is just one of the reports available in the Simulation Results Explorer.
Figure 4 - System overview report example
We note that the availability of the system is expected to be 0.999637 for the duration of 3 years.
Another report of interest for this study is the Block Summary report, located in the Blocks folder in the Simulation Results Explorer..
Figure 5 - Block summary report
From this report, we can obtain the expected number of failures (Expected NOF column), which we can translate to number of spares needed. The following table shows a summary of the total (rounded up) number of spares needed for each type of block.
Table 3 - Summary of the Total Expected Number of Spares Needed
In this initial simulation, the assumption was that the system has access to infinite spares at all times (default setting in BlockSim 6 for spare parts). We used this initial simulation just to get an estimate for the spare parts needs of the system.
3- Setting Up Different Inventory Strategies
Inventory Strategy 1
Table 4 - Summary of settings for Inventory Strategy 1
Figure 6 demonstrates how to enter these settings using block A as an example.
Figure 6 - First inventory strategy for A
Note: In the above figure, we also used an Emergency Spare Provisions policy. If we do not have a way to obtain new external spare parts once the inventory runs out of parts, then blocks that fail and run out of spare parts will stay down for the rest of the simulation time and that would bias the availability estimates. Therefore, the emergency spare provisions policy is set up as a backup for the cases when the inventory is completely starved (when the number of actual failures turns out to be larger than the average expected number of failures) and there is no way to obtain more parts.
Once the spare pool policies have been created, we specify the appropriate policy to associate with each block in the diagram by selecting the policy from the list of available policies in the Spare Part Pool section in the Maintenance tab of the Block Properties window. The next figure shows how to associate a block with its spare pool policy.
Figure 7 - Specifying the inventory policy for a block
After specifying the appropriate policy for each of the blocks in the diagram, we run the simulation to obtain availability metrics and cost estimates for maintaining the inventory. One of the simulation reports in BlockSim 6 is the Pool Summary, located in the Spare Pools folder in the Simulation Results Explorer. This report lists, among other things, the Total Cost of maintaining the inventory.
Figure 8 - The pool summary report
For this inventory strategy, the estimated total cost for maintaining all the pools is $1,159,196. The estimated mean availability can be obtained from the System Overview report or by using the Simulation Quick Calculation Pad (QCP). The estimated mean availability is 0.999637.
Table 5 - Summary of settings for Inventory Strategy 2
Figure 9 demonstrates how to enter these settings using block A as an example.
Figure 9 - Second inventory strategy for A
We use the approach described for Inventory Strategy 1 to specify the appropriate policy for each block, run the simulation and obtain the availability and inventory cost estimates. The estimated mean availability is 0.999637 and the estimated cost for maintaining all the pools is $40,654.
Table 6 - Determining the Appropriate Part Restocking Frequency
The strategy is set up as follows.
Table 7 - Summary of settings for Inventory Strategy 3
Figure 10 demonstrates how to enter these settings using block A as an example.
Figure 10 - Third inventory strategy for A
We use the approach described for Inventory Strategy 1 to specify the appropriate policy for each block and run the simulation and obtain the availability and inventory cost estimates. The estimated mean availability is 0.9851195 and the estimated cost for maintaining all the pools is $94,118.
4- Comparing Different Inventory Strategies
The following table presents a summarized comparison of the different inventory strategies discussed in this article. The table shows the inventory costs incurred and the mean availability level that would be expected if the inventory policy is implemented.
Table 5 - Comparison of the different inventory strategies
Based on the above comparison, we decide that Inventory Strategy 2 is the most suitable strategy due to its significant cost savings (about $1,118,542 in savings compared to the cost of Inventory Strategy 1) and the fact that it also preserves an acceptable level of operation availability. (In this example, there is no difference between the availability level obtained by the first and second inventory strategies, whereas the third strategy causes a significant decrease in availability and does not provide the same cost savings offered by the second strategy.) For this example, Inventory Strategy 2 can be considered as a very good JIT inventory strategy that avoids carrying more parts than needed at any given time.
(*): Used in Inventory Strategy 1 only, in Section 3. The cost of obtaining an Emergency Part is not related to the Fixed/Hourly inventory costs
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