A critical piece of operational equipment contains 30 parts of the same type. The equipment operates 24 hours a day and the critical pieces have a predicted failure frequency of 10,000 hours. Two inventory supply policies are under evaluation; one based on operational probability and the second on annual costs. If spares are procured at 90-day intervals, how many spares should be carried in the inventory to ensure a 95% probability of success?

λ = 1/10,000 = 0.0001
K λt = 30*0.0001*(90*24) = 6.48

Using figure 15.8b from the number of spares is about 11 to ensure 9% probability of success. If spares are procured as part of an EOQ policy with: cost per unit of $100, cost of preparation and shipping of $25, an estimated cost of managing an item in inventory of 25% of the inventory value, what is the order quantity and annual costs? Which policy for ordering spares would you recommend?