Minimizing cost and backorder risk through customer priority on spares inventory

Abstract

Spare parts demands usually occur due to the need to replace spare parts on damaged equipment. Uncertain demands and many types of spare parts require complex management. Therefore, the management of spare parts is very challenging. In this study, we developed a spare part inventory method by considering priorities based on customer class. Customers will be grouped according to the number of demands. The number of requests becomes a fill rate priority. Any request that cannot be fulfilled will have backorder risk. This customer prioritization aims to minimize costs and backorder risks. The difference in customer class aims to minimize total inventory costs. Spare parts will be issued based on the queue discipline which is first in first out. The inventory model is solved by the Lagrange multiplier method. Model verification is carried out in real practice in illustrative examples. The results of the research show that customer priorities that are carried out in the provision of the fulfilment of spare parts can reduce costs and backorder risks.