Technical Note---Optimal Structural Results for Assemble-to-Order Generalized M -Systems

Emre Nadar (), Mustafa Akan () and Alan Scheller-Wolf ()
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Emre Nadar: Department of Industrial Engineering, Bilkent University, 06800 Ankara, Turkey
Mustafa Akan: Tepper School of Business, Carnegie Mellon University, Pittsburgh, Pennsylvania 15213
Alan Scheller-Wolf: Tepper School of Business, Carnegie Mellon University, Pittsburgh, Pennsylvania 15213

Operations Research, 2014, vol. 62, issue 3, 571-579

Abstract: We consider an assemble-to-order generalized M -system with multiple components and multiple products, batch ordering of components, random lead times, and lost sales. We model the system as an infinite-horizon Markov decision process and seek an optimal policy that specifies when a batch of components should be produced (i.e., inventory replenishment) and whether an arriving demand for each product should be satisfied (i.e., inventory allocation). We characterize optimal inventory replenishment and allocation policies under a mild condition on component batch sizes via a new type of policy: lattice-dependent base stock and lattice-dependent rationing .

Keywords: assemble-to-order systems; Markov decision processes; optimal control; lattice-dependent policies (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (11)

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Persistent link: https://EconPapers.repec.org/RePEc:inm:oropre:v:62:y:2014:i:3:p:571-579

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