Materials Management
What this domain tests
Materials management covers MRO inventory, critical spares, stock levels, storeroom control, kitting, obsolescence, and supplier arrangements. The exam tests whether spares are managed by risk and usage rather than by habit.
Core rules and concepts
- Classify inventory by criticality and usage. A high-cost, low-movement part may still require a spare if lead time and consequence are severe.
- Min/max levels should be based on lead time, demand variability, criticality, and carrying cost.
- EOQ balances ordering cost and holding cost; it does not by itself protect against stockout.
- Safety stock covers demand and lead-time variability; critical spares may be justified by risk even with low usage.
- Cycle counting verifies inventory accuracy without shutting down the storeroom. Investigate root causes of error.
- Kitting before scheduling reduces craft waiting and improves schedule compliance.
Worked example
Annual demand for a part is 1,200 units, ordering cost is $50 per order, and annual holding cost is $4 per unit. EOQ = √(2 × 1,200 × $50 ÷ $4) = √30,000 ≈ 173 units. The reasoning: ordering more often raises ordering cost; ordering too much raises holding cost. EOQ finds the order quantity where the two are balanced. But if the part is a critical spare with a 16-week lead time, EOQ alone is insufficient-safety stock or a strategic spare must be justified by the consequence of stockout.
Traps that cost marks
Setting min/max from gut feel. Treating all parts equally in cycle counting. Ignoring obsolete and excess stock. Assuming EOQ protects critical spares. Allowing uncontrolled storeroom access. Kitting after the schedule is frozen. Buying the cheapest part when failure consequence is high.
Exam tip
When a question involves a critical spare, check lead time and consequence before choosing a simple min/max rule. Risk can justify stock that usage alone cannot.