Last time buy and repair decisions for spare parts

S. Behfard*, M.C. van der Heijden, A. Al Hanbali, W.H.M. Zijm

*Corresponding author for this work

Research output: Contribution to journalArticleAcademicpeer-review

31 Citations (Scopus)
4 Downloads (Pure)


Original Equipment Manufacturers (OEM's) of advanced capital goods often offer service contracts for system support to their customers, for which spare parts are needed. Due to technological changes, suppliers of spare parts may stop production at some point in time. As a reaction to that decision, an OEM may place a so-called Last Time Buy (LTB) order to cover demand for spare parts during the remaining service period, which may last for many years. The fact that there might be other alternative sources of supply in the next periods complicates the decision on the LTB. In this paper, we develop a heuristic method to find the near-optimal LTB quantity in presence of an imperfect repair option of the failed parts that can be returned from the field. Comparison of our method to simulation shows high approximation accuracy. Numerical experiments reveal that repair is an excellent option as alternative sourcing, even if it is more expensive than buying a new part, because of the option to postpone the repair until the parts are needed. In addition, we show the impact of other key parameters on costs and LTB quantity.
Original languageEnglish
Pages (from-to)498-510
JournalEuropean journal of operational research
Issue number2
Publication statusPublished - 2015


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