An independent inventory control heuristic for multi-component assemble-to-order systems

Bibo Yang and Joseph Geunes

International Journal of Operational Research, 2010, vol. 7, issue 3, 297-313

Abstract: This article investigates an inventory control problem in a single-level multi-component assembly system. In this system, a product with random demand is assembled-to-order from a number of components. The assembler holds inventory at the component levels. We consider a periodic review inventory control system that uses an order-up-to policy for each component. Component safety stock is held to protect against the stock out risk during component replenishment lead times. We develop a linear approximation heuristic to minimise expected holding and backlog costs and show that this heuristic performs well in comparison to a previously proposed heuristic method in the literature called the equal-fractile heuristic.

Keywords: assemble-to-order; assembly systems; heuristics; inventory control; order-up-to policy; periodic review; safety stock; stock out; component replenishment lead times. (search for similar items in EconPapers)
Date: 2010
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