Breadth of range and depth of stock: forecasting and inventory management at Euro Car Parts Ltd.

Abstract

This paper investigates inventory management issues in a distribution network. The study is motivated by examining the operation of a wholesaling car parts company. Customer service requirements are of paramount importance in this market sector. The nature of the demand facing the company is characterised. The breadth of range of stock keeping units (SKUs) held at a stocking location and the quantity of each SKU held are normally treated in isolation but in this case, the rule developed to select the range of SKU was extended to determine the level of stock to hold. It is intuitively obvious that these two factors should be linked, yet the authors have not found any other literature developing the connection in a practical context. Forecasting issues are explored as the rule on stock range depends on a forecast of the number of orders received for each SKU at each stocking unit. Some implementation issues and extensions are indicated.

Keywords:

• inventory
• range
• stock
• service
• supply chain
• forecasting

Acknowledgements

The authors thank Sukhpal Singh for permission to publish this study and to thank all colleagues at ECP for their help and support during this work.