Inventory management: Parts and

Material
Material in maintenance
Labor with material unavailable, work
cannot be performed.
Overabundance of materials in
inventory can be costly
20 to 40% overabundance cost per
year. (per purchase dollar)
Inventory costs
Obsolescence
Investment costs
Storage costs
Maintenance Inventory
The challenge is to determine what a
correct inventory should be and how to
manage it.
Nether too little nor too much inventory
can be tolerated if effective
maintenance operation is desired.
Maintenance store
A separate entity inside the
maintenance
A part of a facility-wide common
inventory
Combined with production and
operations stores
Ordering and Inventory costs
Purchase
Shipping
Receiving
Unpacking
Inspection
Overheads (procurement functions)
strorage
STOCK MOVMENNTS
Economic order Quantity
An optimum number of units per order,
to optimize the different cost elements.
Most economic purchase quantity to
reduce the overall inventory cost to
minimum.
The role of purchasing
Help to develop the economic order
quantity per each stock item
Determination of lead times and
delivery schedule for purchases,
location, negotiation with vendors
Alternate sources of supply.
Maintaining the stock records
Issuing and receiving
Items used in machinery history and
financial reports
How much available in stock
Unit price of each item
Delivery dates for items under shipping
or delivery.
Stores Catalog
Lists the item store number and
relevant technical data.
Keep the technical specifications of
material such as manufacturer part
number, properties, etc.
Technical Database
Should not be confused with stores
catalog
Manuals, specifications, drawings,
datasheets, etc.
Information the technicians and
engineers needs to refer overtime.
Control of Inventory levels
An inventory level should be established
for each item.
Minimum stock level represents the
safety stock level
Maximum stock level represents EOQ
plus safety stock
Reorder point is the stock level at which
a purchase must be made.
Free use items
One way to reduce record keeping for
common use, low value items.
Free use as needed by maintenance
workers
Replenished continuously by
storekeeper
Storage location
Stores are, generally, located to reduce
workers travel time.
Safety stock and seldom use items, may
be stored in a central warehouse.
Large items and material may be stored
outside the building.
Satellite storeroom may serve remote
and dispersed plant locations.
Pre-kitting of parts
All parts and materials needed for a job
are collected in a kit.
Reduces requisition writing, travel,
waiting, and returns for forgotten items.
Lubrication material
Oils, greases are essential for
maintenance program
Require special storage and handling
precautions
Storage locations should be safe,
remote and properly designed.
Stocking fewer types permits buying
larger quantities with better savings.
Measuring store effectiveness
Stockouts: a good goal 3 to 5%
Service levels : a good goal 95 to 99%
Availability of substitute
Service time
Transaction volume
Number of items per requisition
Turnover rate
EOQ MODEL EXCERSIZE
According to preventive maintenance plan, estimated
annual diesel oil consumption is 20,000 lt.
given oil price per liter is USD 5.00
carrying cost is 10% of the price
Order processing cost, per order USD 10.00
Order lead time 4 weeks
safety stock 5 weeks consumption
Calculate the order size, reorder point, maximum level,
Number of order annually.