On component commonality for periodic review assemble-to-order systems

Antoine Deza (), Kai Huang (), Hongfeng Liang () and Xiao Jiao Wang ()
Additional contact information
Antoine Deza: McMaster University
Kai Huang: McMaster University
Hongfeng Liang: McMaster University
Xiao Jiao Wang: McMaster University

Annals of Operations Research, 2018, vol. 265, issue 1, No 3, 29-46

Abstract: Abstract Akçay and Xu (Manag Sci 50(1):99–116, 2004) studied a periodic review assemble-to-order (ATO) system with an independent base stock policy and a first-come-first-served allocation rule, where the base stock levels and the component allocation are optimized jointly. The formulation is non-convex and, thus theoretically and computationally challenging. In their computational experiments, Akçay and Xu (Manag Sci 50(1):99–116, 2004) modified the right hand side of the inventory availability constraints by substituting linear functions for piece-wise linear ones. This modification may have a significant impact for low budget levels. The optimal solutions obtained via the original formulation; that is, without the modification, include zero base stock levels for some components and indicate consequently a bias against component commonality. We study the impact of component commonality on ATO systems. We show that lowering component commonality may yield a higher type-II service level. The lower degree of component commonality is achieved via separating inventories of the same component for different products. We substantiate this property via computational and theoretical approaches. We show that for low budget levels the use of separate inventories of the same component for different products could achieve a higher reward than with shared inventories. Finally, considering a simple ATO system consisting of one component shared by two products, we characterize the budget ranges such that the use of separate inventories is beneficial, as well as the budget ranges such that component commonality is beneficial.

Keywords: Assemble-to-order; Component commonality; Stochastic programming; Inventory replenishment; Component allocation (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s10479-017-2507-2 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

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:spr:annopr:v:265:y:2018:i:1:d:10.1007_s10479-017-2507-2

Ordering information: This journal article can be ordered from
http://www.springer.com/journal/10479

DOI: 10.1007/s10479-017-2507-2

Access Statistics for this article

Annals of Operations Research is currently edited by Endre Boros

More articles in Annals of Operations Research from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().