Parts Department Operations and Inventory Management
A medium-heavy truck parts department balances two competing demands: keeping high-turnover and high-criticality parts on the shelf while not tying up capital in slow movers. Candidates must understand the vocabulary of inventory control: stocking levels (minimum/maximum), reorder point, economic order quantity, turnover rate, fill rate, and obsolescence. Know the difference between perpetual inventory (updated with each transaction) and periodic inventory (counted at intervals), and how cycle counting (counting a subset on a rotating schedule) differs from a full physical inventory.
Concepts you must know
- ABC classification: A items are few but high-value/high-usage; C items are many but low-value. Control effort should follow the classification.
- Safety stock protects against demand and lead-time variability; it is not the same as the reorder point.
- Reorder point = (average daily usage × lead time in days) + safety stock.
- Bin locations and locator systems reduce picking errors; a good parts operation ties every part number to a physical location.
- Core management: cores are returnable deposits tied to remanufactured parts and must be tracked separately from saleable stock.
Traps in questions
- Confusing turnover (cost of goods sold ÷ average inventory) with fill rate (percentage of demand met from stock).
- Assuming a higher stocking level is always better; excess stock raises carrying cost and obsolescence risk.
- Mixing up reorder point and order quantity.
Worked example
A filter sells 12 units per day; lead time is 5 days; the department wants 30 units of safety stock. Reorder point = (12 × 5) + 30 = 90 units. When on-hand hits 90, place the order - not when it hits zero.