Lifetime Buy Optimization to Minimize Lifecycle Cost

Mismatches between electronic part procurement lifecycles and the lifecycles of the products that they are used in cause products with long manufacturing and/or support lives to incur significant obsolescence management costs. Lifetime buy is one of the most prevalent mitigation approaches employed for electronic part obsolescence management. Making lifetime purchases of parts when they go obsolete involves managing many interacting influences and multiple concurrent buys for multiple parts. The focus of this paper is optimizing lifetime buy quantities by minimizing lifecycle cost. There are multiple factors that contribute to the lifecycle cost associated with a lifetime buy: procurement cost, inventory cost, disposal cost, and penalty cost. The Life of Type Evaluation (LOTE) tool was created to optimize lifetime buy quantities and minimize lifecycle cost. LOTE requires component and system data. With the given data, LOTE uses stochastic analysis to determine the lifetime buy quantity per part that minimizes the lifecycle cost for the system. LOTE was used to determine the optimum lifetime buy quantities for a Motorola communications system.