Advancing stock policy on repairable, intermittently-demanded service parts

Abstract

Many firms generate revenue by operating systems or fleets, such as welding robots, rental cars, aircraft, etc. The contribution of service parts to the availability of the system or fleet is well documented. The majority of service parts are intermittently demanded. Research on intermittent demand has primarily focused on forecast accuracy and generally does not distinguish between the stock policies of consumable versus repairable parts. Often, systems and fleets contain repairable parts which are refurbished because doing so is more cost-effective for the firm than the procurement of new parts. Managing repairable parts is considerably more complex than managing consumable parts. In this article, we create a new approach to advance the supply chain manager’s ability to determine cost-effective stock policy on these intermittently-demanded, repairable service parts. We then test the new approach via a case study and show the approach to be beneficial for a given firm.