With deregulation, utilities in the electric power sector face a much more urgent imperative to emphasize costefficiencies as compared to the days of regulation. One major opportunity for cost savings is through reductions inspare parts inventory. Most utilities are used to carrying large volumes of expensive, relatively slow-moving unitsbecause of a high degree of risk-averseness. In this paper we discuss risk in the context of utilities, with a focus onnuclear power, and overview an ongoing research project that is aimed at incorporating risk and costs into aquantitative decision analysis framework for controlling spare parts inventories.
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