The Final Order Model for Auto Service Parts Considering the End of Product Life Cycle
Date Issued
2009
Date
2009
Author(s)
Chen, Yu-Shan
Abstract
The importance of service parts is much emphasized as the competition in the market becomes severe. These service parts are not only providing product after-sale service but also playing one of the important rules as competing with competitors at the future. Because the duration of the service period is typically much longer than the production period, the service period after the end of production would occupy the larger proportion of the entire service period. This period is called the end-of-life service period. Especially, the supplier of service parts may no longer manufacture the parts after the certain period of time before the end of service period for considering economic production quantity. Therefore, the after service providers must place a final order to meet future demand before the production of service parts has been stopped. If the final order is larger than actual future demand, the surplus would become obsolete inventory; otherwise, it would cause customer complaint, and incur lost sales.n this paper, we first combine an effective demand forecasting model by tradeoff obsolete cost and lost sale cost considering product sales and the rate of return with newsboy problem to determine the optimal final order quantity. Next, we use the real data providing by T company to construct a simulation model in order to comparing our model with current practices of T company. The result shows our model reduce the total cost significantly, so we suggest that T company can apply the new model we developed to place its final order and control its inventory policy more effective.
Subjects
service parts
declining demand forecasting
final order
Type
thesis
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