Cost adjustment for single item pooling models using a dynamic failure rate: A calculation for the aircraft industry

This paper presents an analytical model for cost estimation in a single-item, multi-hub (S-1,S) inventory policy-pooling model for high-value spare parts in the aviation industry. The model extends existing, static pooling models by implementing a dynamic failure rate, using a maintenance free operating period (MFOP) as a measurement technique to increase availability of aircraft components. The gained results through a dynamic failure rate show significant effects for a reduction of total costs of ownership and achieving a better operational stock planning, which is demonstrated in a numerical application.

► Integrating a dynamic failure rate in pooling models in the aircraft industry.
► An examination of the impact of a dynamic failure rate, measured by MFOP.
► Downward adjustment of the failure rate.
► Failure reduction will minimize total costs.
► Illustrated by a case study.