An optimal approach for the joint problem of level of repair analysis and spare parts stocking

We propose a method that can be used when deciding on how to maintain capital goods, given a product design and the layout of a repair network. Capital goods are physical systems that are used to produce products or services. They are expensive and technically complex and have high downtime costs. Examples are manufacturing equipment, defense systems, and medical devices. Due to the high downtime (unavailability) costs of capital goods, a failed component will usually be repaired by replacement by a spare part. In the defense industry, the components that are replaced are called LRUs or line replaceable units. Many of these components are expensive as well and are therefore repaired. These repairs are typically performed by replacement of a subcomponent. Since this is usually done in a repair shop, these subcomponents are called SRUs or shop replaceable units. Instead, it may also be decided to discard the lru and buy a new one. Figure 1 gives an example of a multi-indenture product structure, including the naming convention that we use. We use the terms component and subcomponent if the indenture level is irrelevant. Repairs and discards can be performed at various echelon levels in the multi-echelon repair network, an example of which is shown in Figure 2. We use the naming convention as depicted in this figure. To be able to perform repairs, discards, or movements of components, resources may be required. Such resources may include test, repair, and transportation equipment, but also one time training of service engineers. Spare parts need to be located in the repair network as well, in order to enable quick repairs of both the installed base (spare lrus) and of lrus and srus (spare srus and parts, respectively). The spare parts stocking analysis is conducted to decide which components to put on stock at which location(s) in a repair network in which quantity, such that a target availability of the capital goods is achieved against minimum spare parts investment costs. A well-known method to conduct this analysis is vari-metric, which uses as input: