Most manufacturers of home appliances provide in-home
repair of the appliances that are under warranty. One such Fortune
100 firm had about 70,000 different parts that were used
in the repair of its appliances. The annual value of the parts inventory
war over $7 million. The company had more than 1,300
service vehicles that were dispatched when service requests were
received. Due to limited space on these vehicles, only about 400
parts were typically carried on each one. If a service person arrived
to repair an appliance and did not have necessary part (i.e., a stockout
occured), a special order war made to have the order
delivered by air so that the repair person could return and fix the
appliance as soon as possible.
Deciding which parts to carry was a particularly difficult problem.
A project was begun to find a better way to forecast the
demand for parts and identify which parts should be stocked on
each vehicle. Initially, the intent was to reduce the parts inventory