Effective management of service parts inventories is often critical to
customer satisfaction. If John Deere runs out of a key replacement part in the
middle of harvest season, a farmer could face serious difficulties. The
complicating factor is that many of these parts have very low demand rates and
therefore require models and procedures that differ from those developed in
the Calculating Safety Stock course. This course presents simple models based
on an appropriate probability distribution of slow demand rates. Because many
service parts systems have multiple tiers, we develop models of multilevel
systems composed of regional warehouses and dealers.
Note: This course is planned for future development. Content and scope will be
finalized during the design phase of the course development.
This course is ideal for anyone who understands basic inventory management
tools, but who is faced with managing slow-moving parts. Students who manage
service parts, or other important or high-cost, slow-moving parts, will also
be interested in this course. The course includes many examples.
This course covers the following topics:
The Poisson probability distribution, showing how it applies to slow-moving parts
When to apply the Poisson distribution and when to apply the Normal distribution (which is more commonly used and was applied in the Safety Stock course)
How to calculate optimal inventory levels for slow-moving parts
How to apply these models to a multilevel system
The order-aging chart that illustrates how orders age as you move up the network