Singapore based MRO vendor has a presence at 20+ airports around the world to provide maintenance and spare parts leasing services to Airlines. The company operates on a long term service contract model with well defined SLA for quality of parts and services. Under-stocking of parts results in SLA breach and thus attracts penalty while overstocking results in investment in inventory and carrying cost. Our client wants to take this opportunity to build a forecasting model and optimize the tradeoff between SLA and inventory CAPEX + OPEX.
We modeled both demand and TAT of the Client’s repair service using statistical models. This allowed us to derive the optimal balance between SLA and inventory Cost.
Inputs from stakeholders, process owners and output from forecast was used to build the cost optimization model.
The forecasting and Optimization model achieved :