Determining Economic Order Quantity for Spare Parts with Variable Purchase Prices: A Case Study of ABC Power Plant

Journal article

Authors/Editors

Strategic Research Themes

Publication Details

Author list: Nichanan Boonsrang;Chumpol Monthatipkul

Publication year: 2025

Volume number: 5

Issue number: 1

Start page: 863

End page: 884

Number of pages: 22

URL: https://so03.tci-thaijo.org/index.php/IARJ/article/view/280251

Abstract

Background and Aims: Spare parts inventory control is a critical aspect of the maintenance system in power plants. In this case study, inventory management was largely neglected, leading to excessive inventory and high associated costs. This study aims to develop a quantitative model for determining the optimal order quantities and reorder points for spare parts with variable purchase prices, and to assess the cost-saving potential of this model within the context of the ABC power plant. Methodology: The study applied quantitative analysis for the case study. Historical data from January until December 2022 of the two selected spare parts were collected. Numerical experiments with 30-year simulation runs were conducted. Related per-year costs including ordering costs, holding costs, interest costs, and product costs, were used to analyze the results. Results: The study successfully developed a quantitative model for determining the optimal order quantities and reorder points for the two selected spare parts. The cost-saving potential of this new approach was also evaluated. Numerical experimentation revealed that the total costs could be reduced by 35.27% and 40.95% for the primary and final filters, respectively. Conclusion: The study highlights the significance of effective spare part inventory control in power plant maintenance systems. By applying quantitative analysis and utilizing historical data, the research identified optimal order quantities and reorder points for two critical spare parts. The numerical experiment, using simulation techniques, revealed that implementing the proposed inventory policies could significantly reduce total costs. Specifically, the costs for primary and final filter spare parts were reduced by 35.27% and 40.95%, respectively. These findings underscore the potential benefits of adopting a systematic approach to inventory management in similar settings.

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