Risk-based stock decisions for projects

Abstract

In this report we discuss a model that can be used to determine stocking levels using thedata that comes forward from a Shell RCM analysis and the dataavailable in E-SPIR. The model is appropriate to determine stockquantities for parts that are used in redundancy situations, andfor parts that are used in different pieces of equipment withdifferent downtime costs. Estimating the annual production lossusing the model consists of a number of steps. First, we need todetermine which spares are used for the repairs of which failuremodes. In the second step, we estimate the average waiting timefor spares as a function of the number of spares stocked. In thethird step, the annual downtime costs are determined. We combinethe downtime costs with the holding costs to determine the optimalnumber of parts to stock.