6. Pilot study and results
6.2 Results of the pilot study
To show some results of the pilot study, we show one example per class of the ABC analysis in the following sections. For each spare part we have calculated the reorder point, and EOQ or maximum stock. Table 6.1 shows the examples per class, including a picture and the corresponding inventory control policy. As already mentioned in Section 3.1 the TD of Bolletje uses the item approach, so this approach is also used for the pilot study. This means that we use the same service level for all different spare parts, namely 95 percent, which is decided by the management of Bolletje Almelo. For the service level we take the cycle service level, instead of using the no stock out probability or the fill rate. The cycle service level is defined as the expected probability of not hitting a stock out during the next replenishment cycle, and it is also the probability of not losing sales (Li, 2007).
Class & example
Spare part Inventory control policy according to Silver et al., (2017)
Control policy in Rimses
Class A
PLC
(s,S) Automatic: via reorder point and maximum
stock
Class B
Bearing
(s,Q) Automatic: via reorder point and EOQ
Class C
Lamp
Manual ~ (s,Q) Manual: via reorder point and EOQ
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6.2.1
Examples – Class A item
As an example for a class A item we take one specific Programmable Logic Controller (PLC). A PLC is an digital computer used for the control of manufacturing processes such as assembly lines, robot devices or any activity that requires high reliability control and ease of programming and process fault diagnosis. Different PLCs are used at different production lines at the factory of Bolletje Almelo. These PLCs have long delivery times (>2 days), without these PLCs there is downtime of the production line, and these PLCs are not replaceable by alternative spare parts.
As described in Section 4.5 we use the (s,S) policy for class A items, which means that these items are automatically ordered in Rimses via the reorder point and maximum stock (see Table 6.2).
Inventory control policy according to (Silver, Pyke, &
Thomas, 2017)
Control policy in Rimses
A items (s,S) Automatic: via reorder point and maximum stock
Table 6.2 Inventory control policy for class A items
Table 6.3 shows the data which is available from Rimses for these calculations.
Cycle service level 95% Lead time in days 14
Demand per day 0.0548 St. Dev. of demand 0.02
St. Dev. of lead time 0.01
Table 6.3 Available data of PLC, obtained from Rimses
To determine the correct distribution for the service factor Z we use the rule of thumb of Silver et al. (2017) from Section 3.5:
If the ratio is greater than 0.5, consider a distribution other than the normal.
In this example this ratio is as follows: . This ratio is not greater than 0.5, so we use the Normal distribution.
To determine the reorder point of this PLC we have to make the following calculations:
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6.2.2
Examples – Class B item
As an example for a class B item we take one specific bearing. This bearing has less delivery time (≤ 2 days), because it is almost always directly available from the suppliers of Bolletje. Besides that, this specific bearing is sometimes replaceable by another alternative bearing.
As described in Section 4.5 we use the (s,Q) policy for class B items, which means that these items are automatically ordered in Rimses via the reorder point and EOQ (see Table 6.4).
Inventory control policy according to (Silver, Pyke, &
Thomas, 2017)
Control policy in Rimses
B items (s,Q) Automatic: via reorder point and EOQ
Table 6.4 Inventory control policy for class B items
Table 6.5 shows the available data which is available from Rimses for these calculations.
Cycle service level 95% Lead time in days 2
Demand per day 0.03333 St. Dev. of demand 0.44
St. Dev. of lead time 0.38 Ordering cost per order 10
Holding cost 20 (=0.25*80) Unit price 80 Table 6.5 Available data of bearing, obtained from Rimses
To determine the correct distribution for the service factor Z we use the rule of thumb of Silver et al. (2017) from Section 3.5:
If the ratio is greater than 0.5, consider a distribution other than the normal.
In this example this ratio is as follows: . This ratio is greater than 0.5, so we use the Gamma distribution.
To determine the reorder point and EOQ of this bearing we have to make the following calculations:
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6.2.3
Examples – Class C item
As an example for a class C item we take one specific lamp. This lamp is immediately available from the supplier, without lamp the production line is still running and there are always alternatives lamps to replace this specific lamp.
As described in Section 4.5 we use the manual (s,Q) policy for class C items, which means that these items are manually ordered in Rimses via the reorder point and EOQ (see Table 6.6). Instead of automatically ordering the spare parts the two bin system is used for the C items. This means that the capacity of one bin is set equal to the reorder point.
Inventory control policy according to (Silver, Pyke, &
Thomas, 2017)
Control policy in Rimses
C items Manual ~ (s,Q) Manual: via reorder point and EOQ
Table 6.6 Inventory control policy for class C items
Table 6.7 shows the available data which is available from Rimses for these calculations.
Cycle service level 95% Lead time in days 1
Demand per day 10 St. Dev. of demand 0.32
St. Dev. of lead time 0.01 Ordering cost per order 10
Holding cost 0.125 (=0.25*0.50) Unit price 0.50 Table 6.7 Available data of screw, obtained from Rimses
To determine the correct distribution for the service factor Z we use the rule of thumb of Silver et al. (2017) from Section 3.5:
If the ratio is greater than 0.5, consider a distribution other than the normal.
In this example this ratio is as follows: . This ratio is not greater than 0.5, so we use the Normal distribution.