Development of a multi-scenario simulation model for spare parts inventory optimization in mining operations

2021-8
Şenses, Sena
The growing market competition compels many industries to change their operational structures at strategic and operational levels dramatically. It has been recognized that inventory management requires continuous monitoring and improvement and it is vital for businesses to ensure smooth operations by avoiding production loss and reducing the overall cost of inventory. For various production companies operating in different industries, inventory is considered as one of the most expensive assets. Among different inventory types, the spare parts inventory is of great importance for production management in ensuring high equipment availability at a minimized operating cost. In the mining industry, mass and continuous production should be sustained with an incontrovertible contribution of high-capacity equipment. Due to the high operational loads, complexity, and cost of the mining machines, unplanned downtimes resulting from spare parts' unavailability may cause a great financial loss. Among different types and classifications of spare parts available in a mining spare parts warehouse, tires are significant for operations where wheel machineries are used. In open-pit operations where trucks with varying capacities are extensively employed for material hauling operations, tires can account for up to 20% of the total operating costs. In addition, any tire shortage in a warehouse may lead to tremendous production loss. In this regard, the current study intends to develop a discrete-event simulation algorithm for optimizing spare parts inventory problems in various inventory systems, giving the cost-wise best output among all the scenarios by utilizing Arena® Software. Within the scope of generating these scenarios, different parameter combinations of four inventory policies, namely (s, Q), (s, S), (R, Q), and (R, S), are utilized. The proposed algorithm is implemented for the tires of a truck fleet, which covers seven identical trucks with six tires each and operates in a surface coal mine in Turkey. In this study, four well-known inventory policies are utilized to evaluate both continuous and periodic inventory review approaches. For the continuous reviewing approach, (s, Q) and (s, S) policies are identified, while (R, Q) and (R, S) policies are discussed for the periodic reviewing approach. On this basis, a total of 637 scenarios are generated from the inventory policies built based on different reviewing and triggering mechanisms, and each scenario is simulated for five years. The results show that the most optimal scenario for continuous review inventory policy is observed to be (s=9, S=49), where spare parts are ordered up to an inventory level of 49 whenever the number of components in the inventory drops to 9. Similarly, the most optimal scenario for periodic review policy is observed to be (R=6480, Q=45), where the fixed batch size of 45 is ordered every 6,480h. Accordingly, the annual system cost is observed as $2,604,032 and $2,608,617 for the best-case scenarios of continuous and periodic review policies, respectively. Besides, it was observed from both policies that the model is capable of ensuring the balance between the cost items by allowing stock-out to a certain extent in the best-case scenarios.

Suggestions

An analysis of benefits of inventory and service pooling and information sharing in spare parts management systems
Satır, Benhür; Savaşaneril Tüfekci, Seçil; Serin, Yaşar Yasemin; Department of Industrial Engineering (2010)
Inventory management and production control problem of a dealer operating in a decentralized spare parts network is analyzed in this dissertation. Spare parts network is assumed to be formed of two dealers and the problem of a dealer is considered under the assumption that the other dealer has a known policy. These dealers collaborate through inventory and service pooling. Furthermore, the dealers collaborate through sharing information on the net inventory status. Upon demand arrival, a dealer may request ...
Developing Process Definition for Financial and Physical Resource Management Process in Government Domain
Gökalp, Ebru (2016-06-10)
Public Financial and Physical Resource Management (PFPRM) is becoming a core competency critical to a government organization's competitive advantage. Recent studies have shown that organizations with established PFPRM are able to generate millions of dollars in additional savings and have a distinct competitive advantage. Our literature review showed that there is also a lack of a guideline for process capability determination and improvement of PFPRM. On the other hand, after observing benefits in softwar...
Comparison of Intelligent Classification Techniques by Practicing a Specific Technology Audit
Berkol, A.; Kara, G.; Turk, A. (2016-09-08)
Technology audit activities arc carried out for assessment of firms' technological requirements, capacity or management capability. The aim of these assessments is to define the weaknesses of firms and develop actions in order to improve firms' technological capacity and/or technology management capability. Generally these activities are implemented with survey questionnaires. These questionnaires can be filled by managers of firms or can be implemented as an interview by independent experts. However, evalu...
Using analytic network process to predict the performance of international construction joint ventures
Ozorhon, Beliz; Dikmen Toker, İrem; Birgönül, Mustafa Talat (American Society of Civil Engineers (ASCE), 2007-07-01)
Strategic collaborations such as joint ventures (JVs) have become an important way of exploiting business opportunities for construction companies. However, such entities are difficult to manage due to their composite structures, which entail diverse organizational cultures, styles, and objectives. Therefore, measurement of JV performance has been an interesting research topic although there is no consensus on the definition, measures, and variables of performance yet. Considering the inherent complexities ...
A process assessment model for big data analytics
Gökalp, Ebru; Gökalp, Mert Onuralp; Kayabay, Kerem; Gökalp, Selin; Koçyiğit, Altan; Eren, Pekin Erhan (2022-03-01)
Big data analytics (BDA) grasp the potential of generating valuable insights and empowering businesses to support their strategic decision-making. However, although organizations are aware of BDAs’ potential opportunities, they face challenges to satisfy the BDA-specific processes and integrate them into their daily software development lifecycle. Process capability/ maturity assessment models are used to assist organizations in assessing and realizing the value of emerging capabilities and technologies. Ho...
Citation Formats
S. Şenses, “Development of a multi-scenario simulation model for spare parts inventory optimization in mining operations,” M.S. - Master of Science, Middle East Technical University, 2021.