How to Complete a New RCS Non-Repairable Cost Calculation Analysis

How to Complete a New RCS Non-Repairable Cost Calculation Analysis

How to Complete a Non-Repairable Cost Calculation Analysis

The purpose of this calculation is to determine, the total cost over the complete interval of inventory holding including the resale value of unused spares left in stock at the end of an interval. 
  1. On the Index Page, navigate to the RCS Analysis Module and select New RCS Analysis.

  1. Capture the Analysis Name.


  1. Select the search icon to find the part that you wish to conduct an analysis on. A pop-up will appear where the part can be selected.

  1. Select the applicable part from the Part Look-up table.
  2. Click the Select button at the bottom of the pop-up as illustrated below.

  1. Select the Insurance option from the dropdown.


  1. Select the Non-Repairable radio button.


  1. Expand the Current Spare Stock Policy section
  2. Capture the minimum and maximum stock levels required for the particular non-repairable spare equipment as prescribed by the applicable policy/policies.

  1. Depending on the values entered, ACTOR will calculate the Reorder Point and the Order Quantity.
    1. The Reorder Point- The reorder point is the minimum quantity of a spare part or inventory that must be on hand at all times to ensure there is no interruption in supply. It is used to determine when to replenish inventory to avoid stockouts.
    2. Order Quantity- The order quantity refers to the amount of a spare part or inventory that is ordered when the inventory level drops to or below the reorder point.
  2. Now expand the Usage Per Time section to capture the frequency of usage for the particular spare equipment.
  3. If there is historical usage data available for a particular spare, the user can import the data directly into ACTOR by selecting the browse button.


  1. Locate the file you wish to upload and select open, and the values will be displayed in the grid.
  2. If there is no historical data, users can manually capture the frequency of usage by selecting the Add button.

  1. Capture the frequency of usage value.
  2. Select the Update button. You will then receive a confirmation pop-up to save the changes.
  3. Select OK and the changes will be saved.


  1. Select the Time Unit.
  2. Click the Calculate button and ACTOR will automatically calculate the Average Demand Per Unit of Time as well as the Standard Deviation. The results are visually displayed in a graph called a bell curve which shows the distribution of usage patterns over time.
    1. Average Demand Per Unit of Time- This refers to the average rate at which spare parts are used or consumed over a specific period. This average usage per time helps in determining reorder points, setting inventory levels, and predicting future needs based on historical usage patterns.
    2. Standard Deviation- The standard deviation is a measure of the amount of variation or dispersion of a set of values. A low standard deviation indicates that the values tend to be close to the mean (also called the expected value) of the set, while a high standard deviation indicates that the values are spread out over a wider range.
  3. Below is an example of a calculated result.


  1. Expand the Input Parameters section.
  2. Select the Decision Criteria otherwise also known as the Stock Level Criteria. There are two stock level criteria for non-repairable spares namely Interval Reliability and Cost Calculation. This article focuses on the latter.

  1. Capture the number of Parts in Use. Number of parts in operation, which their failure can cause equipment downtime.
  2. Capture the Demand Rate. This value will automatically be calculated using the Average Demand Per Unit of Time if there is historical usage data that was captured. If there is no history then a demand Rate figure needs to be decided on or determined by the client based on best knowledge at the time and manually entered.
  3. Capture the Current Spares in Stock (If applicable). This is the actual number of inventory in holding.
  4. The Time Unit will be pre-selected based on your selection in the Usage Per Time section.


  1. Capture the Planning Horizon.  This is the timeframe over which spare parts requirements and inventory levels are projected and planned. It involves determining how far into the future the organization needs to forecast and prepare for spare parts needs based on factors such as equipment maintenance schedules, lead times for ordering parts, and expected usage rates.


  1. Now in this section, the user must decide on the factors upon which they wish to conduct their analysis. They can either analyze the data that is captured purely based on the minimum cost implications or by using the spares in stock approach. Both the approaches provide different perspectives of the spares management data. ACTOR has made provision for both options. Check the box which is most applicable. Depending on the selection, the fields will be adjusted to suit the selected option.

Understanding the Minimum Cost Approach

Minimum Cost refers to the minimum cost of maintaining optimum stock levels.

Calculating Emergency Replacement Option: (Applicable to both Minimum Cost and Stock Levels)

  1. Select the Emergency Replacement radio button. 


  1. Emergency Replacement option refers to the costs associated with the emergency procurement of spare equipment. By implementing these emergency replacement options, organizations can reduce downtime and operational disruptions caused by equipment failures, ensuring continuity and efficiency in operations.

  1. Capture the Emergency Cost of Spare Part.
  2. Capture the Regular Cost of Spare Part.
  3. The user must decide to capture the either the Inventory Holding Cost % or Cost of Capital.  The Inventory holding costs are related to the cost of managing the inventory and are regularly expressed per item, per unit time.  The Cost of Capital refers to the total cost of the investment, including acquisition, inventory holding and stock-out costs. These costs usually amount to 25% of the total investment costs and thus can be expressed as a percentage or simply as a monetary value.
  4. Capture the Future Value- This is the resale value of unused spares that are left in stock at the end of an interval.
  5. Click Calculate and the results will be displayed at the bottom of the screen. The results are broken down into different sections:
    1. Calculated Result- This result shows the total cost of spares based on the actual spare holding.
    2. Current Practice- This result shows the total cost of spares based on the optimal spare holding as prescribed by a particular policy.
    3. Spares +1 Scenario- This result shows the total cost of holding 1 extra spare more than the optimal spare holding.
    4. Spares -1 Scenario- This result shows the total cost of holding 1 less spare than the optimal spare holding.
  1. Click Save.

Calculating No Replacement Option: (Applicable to both Minimum Cost and Stock Levels)

  1. Select the No Replacement radio button. No Replacement option refers to cost related operational downtime during outages.


  1. Capture the Downtime Cost. This refers to the financial losses that would be incurred if equipment is not operational due to the unavailability of required spare parts.
  2. Capture The Regular Cost of Spare Part.
  3. Similar to the Emergency option for procuring spare equipment, the user makes a decision to capture either the Inventory Holding Cost % or Cost of Capital for the No Replacement option as well. 
  4. Capture the Future or Resale value of the Spare.
  5. Capture the Fixed Outage Cost- These are expenses incurred regardless of whether equipment is operational or not. 
  6. Click Calculate and the results will be displayed in separate sections as described in the Emergency option for minimum cost calculations.
  7. Click Save.


Understanding the Spares in Stock approach:

Spares in Stock refers to costs associated with holding a suggested number of spare parts depending on an organization's financial situation at any given point in time. This calculation provides a view of the financial implications of holding less or more spare parts than the optimal spare holding.
  1. Once the Spares in Stock radio button is selected, an additional field to capture the suggested stock levels will be displayed.
  2. Capture the suggested stock levels.

  1. Navigate to the Replacement Options section.
  2. Select the Replacement option. Please refer to the sections above for instructions on how to capture data for both options.
  3. Once you have captured all the data depending on the selected option, click Calculate to view the results.
  4. Do not forget to save your analysis.