Impacting an Organization by Reducing Cost of Spare Parts and Excess Inventory

Abstract

Excess inventory and the cost of replacement parts are found to be an area of opportunity within a maintenance department for a vessel terminal in San Juan, Puerto Rico. The quantitative model is the approach that was selected to describe the current inventory status management practices and to compare the information with the theoretical framework. It was confirmed that the demand for the consumption of spare parts was lumpy and intermittent. Results show that increasing stock fulfillment order cycle reduces the cost amount per invoice while higher order quantities of the supplies will lower the costs for an annualized period. Forecasting the consumption of the inventory was challenging to implement due random demand. The increase of safety stock levels by bulk ordering shows an increase in maintenance costs, although it was noted that it decreased the stock shortages and increased the equipment’s uptime for the operation. Key Terms ⎯ inventory management, preventive maintenance, proactive, safety stock level.