Article ID: | iaor201525408 |
Volume: | 66 |
Issue: | 2 |
Start Page Number: | 331 |
End Page Number: | 341 |
Publication Date: | Feb 2015 |
Journal: | Journal of the Operational Research Society |
Authors: | Rnnqvist Mikael, Guajardo Mario, Halvorsen Ann Mari, Kallevik Svein Inge |
Keywords: | inventory: storage, energy, decision, demand |
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 21000 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.