Abstract:
This research investigates the impact of the tire age on customer purchasing decisions and the effectiveness of a suitable model for inventory management under uncertain with known probability distribution of demand quantities per time period. The study utilized data from a case study of an automotive tire service providers. A survey of customer opinions revealed that 91% of respondents consider the age of tires as a crucial factor in their purchasing decisions. Specifically, customers may still consider purchasing tires with an age exceeding 13 weeks if an average price reduction of 18.20% of their sale prices. The analysis of cost and service level indicated that the (T, S, s) is the appropriate inventory control model for the tires, namely models R401 and R702, which are the selected products for this study. Values of parameters were determined to be T = 3 weeks, S = 588 units, s = 520 units for R401 and T = 2 weeks, S = 419 units, s = 280 units for R702. Subsequent analysis of periodic review policy using Monte Carlo simulation under the assumption that tire age affects purchasing decisions indicated that each tire batch for no more than 8 and 9 weeks for R401 and R702, respectively, thus, did not adversely impact profitability and service levels. In conclusion, result of this study shows that the tire age significantly influences customer purchasing decisions. To persuade customers to consider buying the tires with aged exceeding 13 weeks, businesses may need to compensate with supplementary services or price reductions. However, an appropriate inventory control policy could lead to turnover of tires that align with demand patterns and shorten storage durations. Therefore, additional costs that could negatively impact profits can be avoided.