An inventory model for service parts management

Abstract

Service parts inventories represent a unique set of challenges for every organisation because of the presence of a large proportion of parts with erratic or slow-moving demand, thus creating particular problems as far as forecasting and inventory control are concerned. This study attempts to assess the practical value of inventory models put forward in the academic literature for addressing the inventory control problem using actual demand data provided by a leading Maltese Automobile Distributor. A model is generally considered useful if it helps to measurably improve inventory control across a spectrum of demand patterns that include smooth, slow moving, irregular and erratic and, given the large number of items in an inventory, should not be overly complex as to require excessive computer processing. In addition, a model should not be too specialised in case it has a detrimental effect when demand does not adhere to a specific pattern.