Demand fulfillment and availability analysis of a multi-state production system considering spare part inventory policy

Abstract

Customer demand fulfilment is essential for production systems in the highly competitive market environment. Because of that fact, a reliable production line is necessary for timely demand fulfilment, and the system must maintain an appropriate spare parts inventory to run the production line smoothly. This research aims to study the impact of spare part inventory policy on production line availability and demand fulfilment. This paper considers a steel pipe manufacturing company that runs continuously. This company uses a continuous raw material flow and produces discrete finished items. The company’s production system is multi-state with unique characteristics in which the machines can be operated at partial capacity under certain failures or disturbances. Hence, three states of the production system, namely fail, working under failure, and success (denoted as 0, 0.5, and 1, respectively) are considered. In addition, the company follows s,S policy for its spare parts inventory system. To deal with this problem, a discrete-event simulation approach is developed as the problem environment is complex with interdependency and variability. A multi-level reliability block diagram is also used to build the production system model. The proposed simulation model is run for different scenarios with either cost or performance as the objective measure. Based on the analysis of results, the proposed approach can improve the current operation in terms of both production line availability and demand fulfilment.