Joint Order Fulfillment and Inventory Management in Assemble-to-Order Generalized W Systems

Man Yu (), Shaohui Zheng () and Jiguang Chen ()
Additional contact information
Man Yu: School of Business and Management, Hong Kong University of Science and Technology, Kowloon, Hong Kong
Shaohui Zheng: School of Business and Management, Hong Kong University of Science and Technology, Kowloon, Hong Kong
Jiguang Chen: School of Management, Xiamen University, Xiamen 361005, China

Operations Research, 2025, vol. 73, issue 4, 1805-1824

Abstract: This paper characterizes joint order fulfillment and inventory policies for assemble-to-order generalized W systems, in which k products are assembled from a common component and k product-specific (dedicated) components. We consider a periodic-review system and focus on nested fulfillment policies, in which orders are fulfilled in decreasing order of profit margins. We prove that the optimal fulfillment policy of a two-product W system is nested. For systems with more than two products, although nested policies may not be optimal in general, we identify a sufficient condition for the optimal policy to be nested, and furthermore, we show that a nested policy is asymptotically optimal in a high-demand regime. Based on these results, we develop an asymptotically optimal strategy for the joint fulfillment and inventory decision under which the policy for demand fulfillment is static nested and that for inventory procurement is of the newsvendor type. In addition, we derive insights regarding the interactions between the component inventories and find that although the inventories of the common component and a particular dedicated component are complementary, those of different dedicated components may not be substitutable.

Keywords: Operations; and; Supply; Chains; assemble to order; generalized W system; dynamic order fulfillment; nested policy (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://dx.doi.org/10.1287/opre.2021.0281 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:inm:oropre:v:73:y:2025:i:4:p:1805-1824

Access Statistics for this article

More articles in Operations Research from INFORMS Contact information at EDIRC.
Bibliographic data for series maintained by Chris Asher ().