Fleet readiness: Stocking spare parts and high-tech assets

What is it about?

When organizations acquire high-tech capital assets, such as a fleet of trains or (fighter) planes, they often acquire as many assets as possible, and spend the (little) remaining budget on spare parts. In this paper, we show that this is typically not the best approach. In fact, it turns out that it is usually best to acquire only the assets that are strictly necessary (1) to run the schedule (trains) or perform the missions (fighter planes) plus (2) to allow for maintenance on the assets, and spend the rest of the budget on spare parts.

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Why is it important?

Governments spend billions on fleets of fighter planes that are later unable to fly because of a lack of spare parts; it is not uncommon to cannibalize a few planes to get spare parts for the other planes. Similar joint decisions on huge investments in spare parts and high-tech assets are also taken by commercial organization. This paper shows how money can be spent best.