The!Study of Inventory Policies for Spare Parts－A Case Study of Semiconductos Equipment Industry

Abstract

This research explores the inventory policy of a spare part supplier in semiconductor equipment industry in Taiwan. Efficient customer service is essential to the supplier as it affects the sales directly. Inventory management of the spare parts, therefore, is one of the most important activities for the supplier. In such a service system, an efficient inventory policy is essential. The objective of this research is to develop an appropriate inventory policy for the spare part supplier. A VMI-based inventory policy, (ti, s, S), which can be properly referred to as a stocking policy for customer i, for joint consideration of demand and supply by incorporating a continuous review (s, S) type inventory policy. The potential advantage of the developed inventory policy is to improve customer service level, to reduce total inventory cost, and to increase inventory turns. The result of this research presents sufficient evidence to indicate that the VMI-based (ti, s, S) policy results in higher customer service level and lower total inventory cost than (s, S) policy does under same stock levels. In other words, when adopting the (ti, s, S) policy, positive effects in the increase of customer service level and decrease of total inventory cost can be obtained. From the result of Duncan's test, it reveals that combinations of high s, low S, and low to medium ti will result in high customer service level and low inventory cost. Similarly, as long as s and S are both at medium levels, high customer service level and low inventory cost will be obtained no matter what levels of ti value are. In general, all three levels of ti will give higher customer service level and lower inventory cost if s and S are properly set at the corresponding correct levels.