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.