A combined forecast–inventory control procedure for spare parts

A combined forecast–inventory control procedure for spare parts

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Article ID: iaor20012155
Country: United Kingdom
Volume: 51
Issue: 10
Start Page Number: 1184
End Page Number: 1192
Publication Date: Oct 2000
Journal: Journal of the Operational Research Society
Authors: , ,
Keywords: forecasting: applications
Abstract:

This paper examines the performance of two different (s, Q) inventory models, namely a simple and an advanced model, for spare parts in a production plant of a confectionery producer in the Netherlands. The simple approach is more or less standard: the undershoot of the reorder level is not taken into account and the normal distribution is used as the distribution of demand during lead-time. The advanced model takes undershoots into account, differentiates between zero and nonzero demands during lead-time, and utilises the gamma distribution for the demand distribution. Both models are fed with parameters estimated by a procedure that forecasts demand sizes and time between demand occurrences separately (intermittent demand). The results show that the advanced approach yields a service level close to the desired one under many circumstances, while the simple approach is not consistent, in that it leads to much larger inventories in meeting the desired service level for all spare parts.

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