DYNAMIC-PROGRAMMING APPLICATION TO OPTIMIZE SPARE PARTS INVENTORY

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.