A predictive cost model in lot-sizing methodology, with specific reference to aircraft parts inventory: an appraisal

In the airline industry the simple act of purchasing is beginning to involve the complex issue of supply management. It has become a matter of determining the cost of owning the part and deciding which method to use to reduce the cost of logistics and thereby reduce overall costs. This article shows...

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Bibliographic Details
Published in:Production and inventory management journal 2001-06, Vol.42 (3/4), p.24
Main Authors: Friend, Chris H, Swift, A. Louise, Ghobbar, Adel A
Format: Article
Language:English
Subjects:
Aircraft
Aircraft industry
Airlines
Aviation
Component parts
Cost analysis
Costs
Fixed base operators industry
Inventory
Inventory control
Inventory management
Logistics
Management
Material requirements planning
Materials management
OEM
Order quantity
Product information
Purchase orders
Studies
Variance analysis
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Summary:In the airline industry the simple act of purchasing is beginning to involve the complex issue of supply management. It has become a matter of determining the cost of owning the part and deciding which method to use to reduce the cost of logistics and thereby reduce overall costs. This article shows how a lot-size predictive cost model can be used as a tool by a range of material managers, particularly those dealing with erratic demands, when evaluating either lot-size method or the potential effects of such operating factors on lot-sizing performance. In investigating the relative performance of each lot-size method, using mainly the general linear model statistical procedure, we found that all experimental factors and some interactions among them are significant. A simple example is presented to illustrate the performance of the mathematical model, and a set of recommendations is included to enable airline inventory practitioners, among others, to choose a lot-size method for their particular operating parameters.
ISSN:0897-8336