Impact of Failure Rate Uncertainties on the Implementation of Additive Manufacturing in Spare Parts Supply Chains

Abstract

The world of spare parts may be revolutionized by the advent of additive manufacturing (AM). Thanks to the possibility to manufacture spare parts on-demand, AM has attracted great attention in the last years as a substitute of conventional manufacturing techniques (CM). However, both researchers and practitioners point out two main limitations that might hinder the transition from CM to AM for the manufacturing of spare parts: AM parts’ high production costs and uncertain failure rate. While the former limitation will most likely be overcome in the near future, the latter remains an open issue, so far uninvestigated. We therefore aim to investigate the effect of uncertain failure rate estimates on the optimal inventory level and on the total costs of spare parts management. To do so, we adapt a periodic inventory management policy available in the literature to include failure rate uncertainties and perform a parametrical analysis to investigate their impact varying the mean values of the failure rate, the lead times, and the unitary backorder and production costs. From the results it emerged that the effects of the failure rate uncertainties on the optimal inventory level and on the total costs of spare parts management increases exponentially, leading to a divergence up to 250% for both.