How to Complete a New RCS Repairable Cost Analysis

How to Complete a New RCS Repairable Cost Analysis

How to Complete a New Repairable Cost Analysis

  1. These are all the costs associated with purchasing and stocking spares, together with the cost of running out of a spare part where applicable. In general, these costs are acquisition costs, inventory holding costs, and stock-out or shortage costs.
    1. Acquisition Costs- Acquisition costs consider the purchase cost of the items themselves (calculated simply as the unit price times the number of spares bought) and ordering costs associated with the processing of a purchase, from creation to receipt.
    2. Inventory Holding Costs- Inventory holding costs are related to the costs of managing the inventory and are regularly expressed per item, per unit time, costs of warehousing and the cost of obsolescence.
    3. Stock-out or Shortage Costs- Stock-out or shortage costs are incurred whenever demand cannot be routinely satisfied from inventory, due to lack of spares and results in lost production or valuable downtime of a system or piece of equipment.
To begin the analysis:
  1. Select the new RCS Analysis from the index page.


  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 Repairable radio button.

Current Spare Stock Policy

  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.

Usage Per Time

  1. Now expand the Usage Per Time section to capture the frequency of usage for the particular spare equipment.
  2. 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.

Input Parameters

  1. Expand the Input Parameters section.
  2. Select the Decision Criteria otherwise also known as the Stock Level Criteria from the dropdown. In this case the user will select Cost Calculation as illustrated.


  1. Capture the number of Parts in Use. Number of parts in operation, which their failure can cause equipment downtime.
  2. Capture the Mean Time to Repair. Mean Time to Repair (MTTR) refers to the average time taken to repair an item or system after a failure occurs.
  3. 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.
  4. The Unit of Time will be pre-selected based on your selection in the Usage Per Time section.
  5. Capture the Current Spares in Stock. This is the actual number of inventory in holding.
  6. Make a selection between Minimum Required Stock or Spare in Stock calculation and check the appropriate box.


Understanding the Minimum Required Cost Approach

Minimum Required Cost refers to the minimum cost required for maintaining optimum stock levels. If the Minimum Required Cost is selected, the user must then: 
  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 Inventory Holding Cost. The Inventory holding costs are related to the cost of managing the inventory and are regularly expressed per item, per unit time.


  1. 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.

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. As with the calculation above, capture the Downtime Cost.
  2. Capture the Inventory Holding Cost.
  3. Once you have captured all the data, click Calculate to view the results at the bottom of the screen.
  4. Do not forget to save your analysis.