Inventory policies in parts distribution of the capital goods industry

Abstract

This dissertation deals with the determination of two optimal policies to be used by dealers in stocking repair parts under conditions commonly encountered in the capital goods industry, namely: a. Certain repair parts (items) can be returned to the manufacturer at stated intervals; b. Those items which can be returned have a higher probability of demand than those which cannot be returned; c. The practice in this industry is to charge less for items ordered for delivery on regular shipments than for special ordered items; and d. Many of the items demanded are new items, i.e., no record of precious demand - and thus, no demand pattern - exists. Hence policies are needed which minimize the sum of the inventory storage costs plus ordering costs, whether the latter be for stock orders or special orders. ...