Modeling uncertainty in Last Time Buy decisions: the IBM case study

This thesis concerns Last Time Buy (LTB) decisions at IBM´s Service Parts Operations organization for the EMEA region. IBM maintains the installed base throughout the life cycle. Service on this installed base is provided based on contracts until the End of Service date, even if after some time a decision is made to end marketing and production of the product. In the final stages of the product life cycle the supplier of spare parts might decide to discontinue production. At this point a decision needs to be made on how to cover demand during the remaining service period such that enough spare parts are available, a so called Last Time Buy decision. This LTB decision is inevitably difficult, due to a long remaining service period and the high level of uncertainty in demand, arising from uncertainty in the size of the installed base and the part´s failure rate, returns and repair processes. This research focuses on the uncertainty in LTB decisions.