Insourcing additive manufacturing for spare parts production: is it profitable? An extensive analysis and the proposal of a Decision Support System

Recently, Additive Manufacturing (AM) has gained significant interest as promising technology for spare parts production. Unlike Conventional Manufacturing (CM), insourcing AM machine(s) enables the production of spare parts on demand, which in turn reduces inventory levels. However, AM is characterised by high costs, primarily associated with the purchase of AM machines. Therefore, the question arises as to whether insourcing AM is profitable for spare parts production. Here, we elaborated a full factorial comparison of 2,187 instances. Following industrial applications, we considered on demand production for insourced AM, while for CM, a make-to-stock approach was used. We found that under unconstrained stock system, the insourcing of AM is not preferable due to the high costs of AM machines. Under constrained stock system, however, AM is profitable in 68.5% of the analysed instances, leading to an average saving of 46%. Furthermore, for each tested scenario, we determined the maximum order-up-to level that makes AM profitable. From this analysis, we derived a decision tree to identify under which spare parts characteristics (i.e. costs, lead time, and part reliability) and maximum order-up-to levels AM becoming profitable. This serves as a Decision Support System (DSS) to assist practitioners in selecting the best production technology.