Service Parts Management Demand Forecasting and Inventory Control

With the pressure of time-based competition increasing, and customers demanding faster service, the availability of service parts becomes a critical component of manufacturing and servicing operations. Potentially, the aftermarket service industry may account for 25% of a manufacturer’s annual revenue. On the other hand, keeping too many of such spare parts increases operational costs and eats up the bottom line. The challenge is the erratic demand patterns of service parts. Demand commonly is intermittent with some time periods having no demand at all. Forecasting for intermittent demand itself has long been recognized, in the academic literature, as a very difficult business task. It is not only the variability of the demand size but also the variability of the demand pattern that makes intermittent demand so difficult to forecast. Hence management of service parts is a significant organizational problem. Therefore, small improvements in a company’s system, regarding service parts, may be translated to substantial cost savings.

Service Parts Management provides an overview and detailed treatment of the current state of the research available on the forecasting and inventory management of items with intermittent demand. The book is divided into two parts, one for demand forecasting and one for inventory control. Demand forecasting techniques are presented for parametric and nonparametric approaches. Error measures, distributional assumptions, and the effects of correlation are all examined in the forecasting context while inventory control is examined in the continuous and periodic review cases. Multi echelon cases and inventory pooling are also considered.

An excellent reference for key concepts and a leading resource for further research, Service Parts Management guides researchers and practitioners in finding better management solutions to their problems.