BIOPHARMACEUTICALS

Avoid overstocking
the stockroom –
Save your R&D
published by srl
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Implementing logistics in the
Fax 0039 02 8376457 biopharmaceutical industry
w w w . b5 s r l . c o m
development effort
SPARES NOMOGRAPH with respect to the required stock level S
MARTIN PEACOCK 1 * using the Spares Nomograph *
EDWARD WELCH 2 The expression used for determining the (Figure 1).
quantity of spare parts that should be The Spares Nomograph uses a 3-step
1. AIC Technica
2450 Mariner Square Loop kept on-hand is the Poisson distribution. process:
1. Decide the acceptable Confidence
Alameda, CA 94501, USA S
(KλT ) n e − λT
Tel +1 774 810 0091
martin.peacock@aictechnica.com
P= ∑
n=0
n!
(1) Level that the item will be in stock;
99.5% for business critical spares
decreasing to 70% for non-critical
www.aictechnica.com
where P = probability of spares at hand; spares.
S = number of spare parts carried in 2. Calculate the Composite Reliability
2. Del Rey Systems & Technology, Inc stock; K = the quantity of parts used of KλT (Number of Systems, Failure
7844 Convoy Court a particular type; λ = failure rate; Rate, and Restock Time).
San Diego, California 92111 T = time interval.
www.delreysys.com Knowing the variable and the
Confidence Level, then the number of * In 1964 a nomograph was created of the
* Corresponding author spares that should be in a departments Spares Poisson Distribution Formula and
stock, S, can be calculated. In practice published in Ref. 1. The nomograph and its
To ensure efficiency of the biopharmaceutical the Poisson distribution can be solved use is also found in Refs. 2, 3.
ABSTRACT

development effort it is important to have

spare parts at hand, e.g. it is not acceptable to
have projects limited by the availability of
glassware, at the same time it is not
appropriate to have limited Biopharmaceutical
Development budgets and storage space tied
up in unused spare parts, i.e. excess glassware
in the stockroom.
This article suggests that the
Biopharmaceutical industry can benefit from
the use of the Spares Nomograph used in the
Defense, Retail, and Electronics Industries. The
Spares Nomograph quantifies the exact
number of spare parts a department requires
based on:
1. Number of systems (K) – how many
systems are used within the department.
2. Reliability (λ) – how often does the item
break-down and/or damage; often
referred to as Mean Time Between
Failures (MTBF), however, Failure Rate
value is used (the inverse of MTBF).
3. Restock times (T) – how quickly can an
item be replaced or repaired.
4. Confidence Level – when an item fails
and/or damage occurs what level of
confidence the department needs that a
replacement is immediately at hand. This
can range from 99.5% for business critical
spare parts to less than 70% for non-
critical items.
In this article we use the example of 1-L
jacketed reactors within a Biopharmaceutical
process chemistry department to illustrate the
use of the Spares Nomograph. Figure 1 – The Spares Nomograph

20 JULY/AUGUST 2008 BIOPHARMACEUTICALS

3. Draw a straight line from the
Composite Reliability to the required
Confidence Level, where the line
intercepts the Number of Spares is
the stock level required.

Composite Reliability
The Composite Reliability is a function
of the number of items that are required
at any one time, N, the time to restock
an item, T, and the Mean Time Between
Failures (MTBF).
Composite Reliability
T
KλT = N × (2)
MTBF
where N = Number of systems;
T = Restock time; MTBF = how often
does an item break-down, is damaged,
needs replacing

CASE STUDY 1 – ASSESSING

STOCK LEVELS AS A FUNCTION
OF CONFIDENCE LEVEL

A process chemistry department expects

to have five 1-litre jacketed vessels in Figure 2 – The line drawn from a calculated Composite Reliability of 1.875 to a Confidence
use at any one time, as the vessels are Level of 95% intercepts the Number of Spares Line near 4
in frequent use it is assumed a vessel
can be chipped or cracked on average allows the department to quantify the CASE STUDY 2 – ASSESSING
every 8 weeks, with it taking 3 weeks to level of risk it is willing to carry with STOCK LEVELS AS A FUNCTION OF
repair a damaged vessel. business critical spares. Here the RELIABILITY (MTBF)
The department has decided that department can judge how critical an
these vessels are business critical and so item is and stock spares accordingly, by Our department in Case Study 2 is
they want a 95% Confidence Level that accepting a greater risk that a spares considering purchasing new vessels with
there will be spare vessel in stock in the may not be available the department thicker glass at fragile points, there is
event of damage to a vessel. The reduces its vessel spares inventory by evidence that the Reliability, i.e. MTBF, has
variable are therefore: Number of half. increased to 20 weeks.
systems (N) = 5, MTBF = 8, Restock
time (T) = 3, Confidence Level = 95%;
using Formula 2 we calculate a
Composite Reliability KλT of 1.875. By
drawing a straight line from the
Composite Reliability of 1.875 to the
95% Confidence Level we see that it
intercepts the Number of Spares
required close to a value of 4 (Figure 2).
Therefore the department needs to
hold a stock of four 1 L jacketed vessels
in order to ensure a 95% Confidence
Level that there will be a spare vessel in
the event of all five vessels being in use
and one was damaged.
Retrospectively the department
decides that it does not have the budget
to purchase four spare vessels, but it is
willing to reduce its Confidence Level
from 95% to 75%. Using the same
Composite Reliability of 1.875 the line is
redrawn to a Confidence Level of 75%;
the redrawn line intercepts the Number
of Spares close to a value of 2
(Figure 3). By re-evaluating their
Confidence Level expectations the
department has reduced the number of
spares required from 4 to 2, whilst
quantifying the business risk in doing so. Figure 3 – The line drawn from a calculated Composite Reliability of 1.875 to a Confidence
The use of the Spares Nomograph Level of 75% intercepts the Number of Spares Line near 2

BIOPHARMACEUTICALS JULY/AUGUST 2008 21


Figure 4 – The line drawn from a calculated Composite Reliability of 0.75 to a Confidence
Level of 95% intercepts the Number of Spares Line near 2
The department again expects to have
all five vessels in continuous parallel use.
In the case of a breakage the department
needs a 95% Confidence Level that there
is a spare vessel in their store. The restock
or repair time remains at 3 weeks.
The variables are: Number of
systems (N) = 5, MTBF = 20, Restock
time (T) = 3, Confidence Level = 95%,
Figure 5 – The lines drawn from a calculated Composite Reliability of 1 and 0.375 to a
Confidence Level of 95% intercept the Number of Spares Line near 3 and 1 respectively
22 JULY/AUGUST 2008
and again using Formula 2 we calculate a
Composite Reliability of 0.75. By drawing
a straight line from the Composite
Reliability of 0.75 to the 95% Confidence
Level we see that it intercepts the
Number of Spares required close to a
value of 2 (Figure 4).
Clearly in this case if the new vessels
are more reliable and the MTBF increases
from 8 to 20 weeks then the stock levels
can be decreased from 4 to 2.
CASE STUDY 3 – ASSESSING
STOCK LEVELS AS A FUNCTION
OF RE-STOCK TIME
Our process chemistry department wants
to reduce the cost of stock items and so
has spoken to their vessel supplier who
has agreed a re-stock time of 3 days, i.e.
circa 0.45 weeks.
The MTBF remains the same and the
department wishes to maintain its 95%
Confidence Level that there is a spare
vessel immediately at hand if there is a
breakage. The variable are: Number of
systems (N) = 5, MTBF = 8, Restock
time (T) = 0.45, Confidence
Level = 95% and using Formula 2 we
calculate a Composite Reliability of 0.75.
Drawing a straight line from the
Composite Reliability of 0.75 to the 95%
Confidence Level we see that it
intercepts the Number of Spares
required close to a value of 2 (Figure 4).
Therefore our department has
reduced its spares inventory by ensuring
a guarantee from its glassware supplier
of a 3 day turn around on restocking
damaged vessels.
CASE STUDY 4 – COMPARISON
OF TWO GLASSWARE VENDORS
Our department has opened a new
satellite site where they are expecting to
have three 1-L jacketed vessels running
at all times. They expect to have a 95%
Confidence Level that if a vessel breaks a
spare it is immediately available.
Two vendors, Vendor 1 and Vendor 2,
bid for the contract to supply the vessels.
Vendor 1 has a jacketed vessel
costing $ 300, the glass is thin in parts
and so it is estimated that with constant
usage then the MTBF will be 6 weeks.
The vendor guarantees a 2 week turn
around on repairing and replacing the
vessels. The variable are: Number of
systems (N) = 3, MTBF = 6, Restock
time (T) = 2, Confidence Level = 95%,
using Formula 2 we calculate a
Composite Reliability of 1 for Vendor 1
Vendor 2 has a jacketed vessel
costing $ 450, the glass is thicker at the
vulnerable points and it is estimated that
in constant usage then the MTBF is
16 weeks. Again the vendor guarantees a
2 week turn around on repairing and
replacing vessels. Using Formula 2 we
calculate a Composite Reliability of 0.375
for Vendor 2.
By comparing both vendors at the
95% Confidence Level we see that
purchasing from Vendor 1 would require
3 additional vessels for stock, whilst
BIOPHARMACEUTICALS
Vendor 2 would require 1 additional item
for stock (Figure 5).
If the department purchases from
Vendor 1 with a 95% Confidence Level
that a spare vessel is at hand then the
purchase price is $ 1800 (3 vessels +
3 spare vessels), and if the department
purchases from Vendor 2 with a 95%
Confidence Level of that a spare vessel
is at hand then the purchase price is
again $ 1800 (3 vessels +
1 spare vessel).
The use of the Spares Nomograph in
this Vendor comparison does quantify
one aspect of ownership and helps with
the decision making process. Although
cost is an important parameter when
making purchasing decisions Reliability is
also important, and a quantification of
Reliability versus price can be made
using the Spares Nomograph.
CONCLUSIONS
The Spares Nomograph can perform a
useful function in the Biopharmaceutical
BIOPHARMACEUTICALS
industry by providing a metric guide to
making decisions on spares quantity. It
reduces uncertainty when purchasing a
new system or fitting out a department,
as it allows an upfront assessment of
spare parts required.
The Spares Nomograph provides an
easy to understand metric when
discussing spares and consumables
budgets, a department can quickly show
that the number of spares increases the
Confidence Level and therefore reduce
business risk, but at the same time the
Spares Nomograph will stop department
overstocking an items; once the
department has reached a 95%
Confidence Level for an item further
increases in stock level and Confidence
Level may not be cost effective.
The Spares Nomograph can also be
used when comparing Vendors; in
discussing the purchase of a system a
department could negotiate guarantees
on an item’s reliability and restock time,
then based on these two parameters
and the number of systems required it is
a simple matter to calculate how many
spares would have to be purchased. This
better informs the purchasing decision,
as it not simply the price on the primary
items, but also the price of stocking
enough spares to ensure confidence that
the system is operating when required.
In complex purchasing scenario where
Vendors’ pricing, reliability and restock
times are different a comparison can be
made by combing the parameters within
the Composite Reliability Function.
REFERENCES
1) NAVSHIPS 94324, Maintainability Design
Handbook for Designers of Shipboard
Electronic Equipment; US Department of
the Navy, Naval Ship Systems Command:
Washington, D.C., 1964
2) BLANCHARD B.S. Logistics Engineering and
Management; Prentice-Hall, Inc: Upper
Saddle River, NJ, USA, 6th Edn, 2003
3) ORSBURN D.K. Spares Management
Handbook; McGraw-Hill, Inc: New York,
1991
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