Do we hold the right levels of spare parts? Have we done the right analysis? These are two questions that keep maintenance and reliability engineers awake at night. Determining which approach to use for calculating reorder points and reorder quantities is the easy part of this dilemma. The hard part is clarifying the assumptions behind the calculations and ensuring that the data is ‘clean’.
For items that move regularly and in some quantity, use the standard normal (or Gaussian) formula. For slow moving items and those that move in sets or as units of one, use a Poisson function. (Look these up in my book Smart Inventory Solutions!) To clarify the assumptions and gain the consistency of good data, try identifying the issues to consider in a set of clear guidelines. By developing and implementing clear stocking policies and procedures you can provide the logic and guidelines for decision making on stock levels and calculating reorder quantities. The advantage of this is that it provides guidance and continuity for decision making and provides the basis for future audits of inventory holdings. Thus, there will be one less thing keeping maintenance and reliability engineers awake at night!
