Forecasting and Scheduling for Past-Model Replacement Parts

All-time requirements forecasting and the translation of these forecasts, via a dynamic inventory model, into production schedules are effective tools for controlling manufacturing, inventory and obsolescence costs of past-model replacement parts. Traditional forecasting rules and steady-state EOQ models prove inappropriate for the special problems posed by the demand decay characteristics of all service parts. A new forecasting technique, based on the principle of estimating sales requirements for all-time into the future, is described along with a dynamic inventory model for ordering production runs. Together, these techniques—developed for implementation by an American auto manufacture—provide results superior to those of other, more traditional, procedures. An inventory review system for achieving model implementation is also discussed.