Classification Study In The Inventory Management Of Service Parts

Service parts are those parts stocked by enterprises to offer maintenance or exchangeservice to products sold with guarantee. Many factors make enterprises improve theinventory management of service parts, such as the competition, customers' requestfor fast response, the huge profit and cost reduction. But the distinguished differencesbetween the demand of service parts and that of finished goods makes commoninventory control methods inapplicable.It is found through literature review that the proper classification of service parts isvital to good inventory management of service parts. This paper puts forward atwo-step method to classify service parts. In the first step, the criterion of ABCclassification is the annual consumption, and class C parts are selected and givendifferent stocking suggestions based on other two characteristics: criticality and unitprice, and other parts with relatively high consumption will go to step two. In step two,Analytic Hierarchy Process and ABC classification are combined to classify thoseparts based on three characteristics: criticality, lead time and annual consumptionvalue. Based on their capability constraint enterprises can choose to pay moreattention to class A parts or class A and class B parts. In comparison with traditionalABC classification using annual consumption value as the only criterion, this two-stepmethod can better identify key parts that matters to the customer service level andinventory cost of enterprises, and helps to improve the efficiency and effectiveness.But due to the lack of information of the life cycle phase of the service parts, thismethod may not suit enterprises whose parts have short life cycles well. In the end,this paper shows by an example that coordination through the supply chain may be theorientation of future research in this area.