After sales services, especially the provision of spare parts, is not only a legal obligation but also a way of providing a competitive advantage for a business in a competitive market. However, at least for spare parts, in addition to the capital tied to the inventory, the low demand quantities and the risk of parts becoming obsolete pose a risk for holding large inventories. Therefore, it is advantageous to minimize the risk tied to the inventory while still providing high service of spare parts.

The aim of the thesis was to optimize stock levels of a spare part warehouse for a case Company, whilst minimizing tied capital and maximizing service level of the warehouse. The main research question was: what is the most feasible inventory control model for the case Company? The scope of the research was limited to the spare parts for road maintenance equipment for the case Company. Quantitative methods, provided in the literature study, were primarily used in this thesis, whereas qualitative methods were used as a support for the case study.

The case company is a developer of road maintenance solutions. Their core business is to design and manufacture road maintenance equipment for property maintenance vehicles, wheel loaders, tractors and excavators. Their product assortment consists of road sweeping equipment and snow ploughing equipment, which are used seasonally, at least in Finland. For the aforementioned products, the main market area is Finland, Sweden and Norway.

The research was conducted by collecting theoretical frameworks for forecasting and inventory control for spare parts. A collection of the most common forecasting methods was applied to the historical sales data for spare parts and evaluated. An analysis of demand characteristics was then conducted and individual stock keeping units were categorized into four distinct groups, based on sales volume, and further classified into two groups, based on part characteristics. On the basis of the forecasted values, the safety stock, the minimum and maximum stock levels were calculated for individual stock keeping units.

The current state of the model for demand forecasting and inventory control was a simple one, where no safety stock levels or re-reorder points were defined and the demand was estimated based on the demand for the previous season. The current model inadequately met the requirements of customers. The characteristics of the demand for spare parts of the case company is highly seasonal and intermittent in nature. To answer the main research question, safety stock levels, re-order points and order quantities were established for individual stock keeping units. Comparing the inventory model provided in this thesis to the current model of the case company, a decrease in inventory value is possible while maintaining high service level.