CMRP MRO Spares Management 2 — Questions and Answers
Question 1: What does MRO stand for in spare parts management?
- Manufacturing Resource Optimization
- Maintenance, Repair, and Operations (Correct answer)
- Material Requirement Output
- Machine Replacement Order
Correct answer: Maintenance, Repair, and Operations
MRO stands for Maintenance, Repair, and Operations, referring to consumable materials and supplies needed for operations.
MRO encompasses spare parts, consumables, tools, safety equipment, and facility supplies. MRO inventory typically represents 5-10% of total asset value and can account for 40-50% of total maintenance costs.
Question 2: What is the purpose of ABC classification in spare parts inventory?
- To alphabetize parts
- To categorize parts by value and usage to apply different control strategies (Correct answer)
- To classify by color
- To assign to different warehouses
Correct answer: To categorize parts by value and usage to apply different control strategies
ABC classification uses the Pareto principle to categorize items by annual usage value.
Class A items (10-20% of SKUs) represent 70-80% of value and receive the tightest controls. Class B items (20-30%) represent 15-20%. Class C items (50-70%) represent 5-10% of value.
Question 3: What is the Economic Order Quantity (EOQ) formula used to determine?
- Maximum inventory level
- The optimal order quantity minimizing total ordering and carrying costs (Correct answer)
- The reorder point
- Maximum number of suppliers
Correct answer: The optimal order quantity minimizing total ordering and carrying costs
EOQ calculates the order quantity that balances ordering costs against holding costs.
EOQ = sqrt(2DS/H). MRO parts often have lumpy demand, making EOQ less applicable than for production materials. For insurance spares, stocking decisions should be based on criticality and risk assessment.
Question 4: What is the purpose of a critical spares analysis?
- To identify the most expensive parts
- To determine which spares must be stocked to avoid unacceptable risks from equipment failure (Correct answer)
- To find damaged parts
- To calculate depreciation
Correct answer: To determine which spares must be stocked to avoid unacceptable risks from equipment failure
Critical spares analysis identifies parts that must be available to prevent unacceptable consequences from equipment failure.
The analysis evaluates consequence of not having the part, probability of need, lead time, cost of stocking vs. stockout, and alternative strategies. Insurance spares often have low turnover but are stocked because downtime cost exceeds carrying cost.
Question 5: What is the reorder point in inventory management?
- The price at which to reorder
- The inventory level at which a new order should be placed (Correct answer)
- The location where orders are placed
- The time of day for ordering
Correct answer: The inventory level at which a new order should be placed
The reorder point triggers a purchase order, set to cover expected demand during lead time plus safety stock.
Reorder Point = (Average Daily Demand x Lead Time) + Safety Stock. For MRO parts with variable demand, safety stock provides a buffer against demand and lead time uncertainty.
Question 6: What is vendor-managed inventory (VMI) in MRO?
- Inventory managed by maintenance
- An arrangement where the supplier monitors and replenishes inventory at your facility (Correct answer)
- Inventory at the vendor's warehouse
- Equipment managed by the OEM
Correct answer: An arrangement where the supplier monitors and replenishes inventory at your facility
VMI shifts responsibility for monitoring and replenishing MRO inventory to the supplier.
VMI works best for high-consumption, standardized items. The vendor monitors usage through vending machines or bin-level sensors, replenishes automatically, and invoices on consumption.
CMRP MRO Spares Management 2
What does MRO stand for in spare parts management?