The cost of acquiring and storing spare parts generally lies between 5
% to 7% of the total electricity generation cost. Considering the amou
nt of funds invested in the spare parts inventory, most generation div
isions in power industry try to optimize their investment. This paper
presents an application of an optimal resource allocation method with
the use of Dynamic Programming to optimize spare parts inventory. The
method considers power plant availability as the objective function; a
nd inventory budget as the constraint. Thus, for a given budget, Dynam
ic Programming configures a spare parts inventory which attains the hi
ghest availability level. This approach has been implemented as a, dec
ision support system which assists inventory managers and engineers to
optimize their inventory policy. The results of two case studies, for
a base load unit and a peaking. unit, illustrate possible application
s and outcomes of the decision support system.