Portfolio Effect on End User Spare parts based on Demand Patterns

Abstract

This paper use 1577 items of end-user spare parts data from two authorized service-center for a global brand motor cycle product that become the main means of public transportation in Indonesia to study the Portfolio Effect on end-user spare parts based on their demand patterns categorized as smooth, erratic, intermittent and lumpy. It found that items in the lumpy category got larger benefits from Portfolio Effect compared to other categories, with an average of 25.13% and standard deviation 9.70%. Despite their high fluctuations, they have relatively low demand (ρ) and Magnitude (M) coefficients so they can have more benefit from consolidation with relatively low risk.