In this article we explain the benefits of using a Mean Time Between Stock-Out (MTBSO) goal as opposed to using Stock-Out-Risk, Availability or Unavailability goals for spare parts optimisation.
Problem 1 – No Time-Frame
Often requirements documents will specify something like, “spare parts availability shall be 95%”. What does this mean? Nothing. For an availability goal to be meaningful it must combine the availability goal and the time frame. Therefore, “spare parts availability measured in any 30 day period shall be 95%” would be correct.
Problem 2 – Interpretation
Most project sponsors don’t really understand what 95% spare parts availability measured in a 30-day time frame means. As I am sure you know, it actually means that on average you should expect a stock-out situation every 600 days (see calculation below). I wonder how many project sponsors actually appreciate this when they compile their requirements documents.
Calculating the MTBSO
MTBSO is defined by the following equation:
[Mean Time Between Stock-Out] = [Replenishment Delay] / [Probability of Unavailability]
Using the previous example: 95% spare parts availability – 30-day time frame
MTBSO = 30 days / [1 – 0.95] = 30 / .05 = 600 days (1.67 years)
Using the MTBSO brings the following benefits:
1. Availability Goals are Always Meaningful
Using the MTBSO figure there is no chance that anybody can make a mistake. The measurement period and the availability goal are combined into one easy to interpret value.
2. Easy to Interpret Goals
Everybody in the team can understand that in 10 years we are likely to experience 5 stock-out situations if we have a MTBSO of 2-years.