Airflow Aircraft (Abridged)

Abstract

A manufacturer of turboprop airplanes must evaluate its spare-part inventory control system. Economic order quantities, safety stocks, and reorder points must be calculated, and issues regarding relevant costs and performance measures must be addressed.

Excerpt

UVA-OM-1396

September 15, 2009

AIRFLOW AIRCRAFT, INC. (ABRIDGED)

Across the Hudson from New York City, at the headquarters of Airflow Aircraft, Inc., Joe Garnett and Peter Bankers were having lunch in the cafeteria. Garnett, the procurement manager, was expressing concern about spare-parts inventory levels and the firm's responsiveness to customers with Bankers, the inventory manager. Bankers knew that he and his staff had been doing their best to quickly provide spare parts to Airflow customers: owners and operators of turboprop airplanes. The company had recently appointed a new vice president of procurement and inventory-control operations, Jane Eisenhower, and Garnett had been assigned to do an analysis for her and develop a plan addressing the matter as quickly as possible.

The Company

Established in 1982, Airflow Aircraft, Inc. (Airflow) was a wholly owned subsidiary of French Aerospace (FA), one of the largest commercial aircraft manufacturers in the world, with annual sales exceeding $ 10 billion. FA offered a wide range of aircraft, from large jets to small, regional turboprops. Its regional turboprop business was assumed by another wholly owned subsidiary, Airflow Aircraft Limited (AAL), headquartered in Nice, France. AAL was responsible for designing, developing, and manufacturing the AAL family of aircraft. In addition, it undertook the marketing and selling of those products worldwide, excluding North and South America, Australia, and the Pacific Rim countries, which Airflow covered. In this large international market, Airflow was responsible for marketing, selling, and supporting of the products and parts made.

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Keywords: economic order quantity, inventory management, international