IDEAS home Printed from https://ideas.repec.org/a/eee/ejores/v271y2018i1p80-96.html
   My bibliography  Save this article

Optimal and heuristic policies for assemble-to-order systems with different review periods

Author

Listed:
  • Karaarslan, Gönül A.
  • Atan, Zümbül
  • de Kok, Ton
  • Kiesmüller, Gudrun P.

Abstract

We study an assemble-to-order (ATO) system with a single end product assembled from two components. The inventory levels of the components are reviewed periodically. One component is expensive and has a long lead time and short review period, whereas the other component is relatively cheap with a shorter lead time and longer review period. The lead times are deterministic and review periods are determined exogenously. Stochastic customer demand occurs for the end product only and unsatisfied customer demands are backordered. The system incurs holding costs for component inventories and penalty costs for backorders. Assuming an infinite planning horizon, our objective is to identify the optimal component ordering policy to minimize the long-run average cost. Under specific demand distributions we identify the properties of the optimal component ordering policy and observe that the optimal policy has a complex state-dependent structure. Motivated by the complexity of the optimal policy, we introduce a heuristic component ordering policy for more general demand distributions. Given that the heuristic performs well, we use it to measure the effects of various system parameters on the total cost.

Suggested Citation

  • Karaarslan, Gönül A. & Atan, Zümbül & de Kok, Ton & Kiesmüller, Gudrun P., 2018. "Optimal and heuristic policies for assemble-to-order systems with different review periods," European Journal of Operational Research, Elsevier, vol. 271(1), pages 80-96.
    • Handle: RePEc:eee:ejores:v:271:y:2018:i:1:p:80-96
    DOI: 10.1016/j.ejor.2018.05.013
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0377221718304077
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.ejor.2018.05.013?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Charles P. Schmidt & Steven Nahmias, 1985. "Optimal Policy for a Two-Stage Assembly System under Random Demand," Operations Research, INFORMS, vol. 33(5), pages 1130-1145, October.
    2. Karaarslan, A.G. & Kiesmüller, G.P. & de Kok, A.G., 2013. "Analysis of an assemble-to-order system with different review periods," International Journal of Production Economics, Elsevier, vol. 143(2), pages 335-341.
    3. Antony Svoronos & Paul Zipkin, 1988. "Estimating the Performance of Multi-Level Inventory Systems," Operations Research, INFORMS, vol. 36(1), pages 57-72, February.
    4. Elhafsi, Mohsen & Hamouda, Essia, 2015. "Managing an assemble-to-order system with after sales market for components," European Journal of Operational Research, Elsevier, vol. 242(3), pages 828-841.
    5. Andrew J. Clark & Herbert Scarf, 2004. "Optimal Policies for a Multi-Echelon Inventory Problem," Management Science, INFORMS, vol. 50(12_supple), pages 1782-1790, December.
    6. de Kok, Ton G. & Visschers, Jeremy W. C. H., 1999. "Analysis of assembly systems with service level constraints," International Journal of Production Economics, Elsevier, vol. 59(1-3), pages 313-326, March.
    7. Mustafa K. Doğru & Martin I. Reiman & Qiong Wang, 2010. "A Stochastic Programming Based Inventory Policy for Assemble-to-Order Systems with Application to the W Model," Operations Research, INFORMS, vol. 58(4-part-1), pages 849-864, August.
    8. Kaj Rosling, 1989. "Optimal Inventory Policies for Assembly Systems Under Random Demands," Operations Research, INFORMS, vol. 37(4), pages 565-579, August.
    9. Fangruo Chen, 2000. "Optimal Policies for Multi-Echelon Inventory Problems with Batch Ordering," Operations Research, INFORMS, vol. 48(3), pages 376-389, June.
    10. Martin I. Reiman & Qiong Wang, 2015. "Asymptotically Optimal Inventory Control for Assemble-to-Order Systems with Identical Lead Times," Operations Research, INFORMS, vol. 63(3), pages 716-732, June.
    11. Atan, Zümbül & Ahmadi, Taher & Stegehuis, Clara & Kok, Ton de & Adan, Ivo, 2017. "Assemble-to-order systems: A review," European Journal of Operational Research, Elsevier, vol. 261(3), pages 866-879.
    12. Lijian Lu & Jing‐Sheng Song & Hanqin Zhang, 2015. "Optimal and asymptotically optimal policies for assemble‐to‐order n‐ and W‐systems," Naval Research Logistics (NRL), John Wiley & Sons, vol. 62(8), pages 617-645, December.
    13. Emre Nadar & Mustafa Akan & Alan Scheller-Wolf, 2016. "Experimental Results Indicating Lattice-Dependent Policies May Be Optimal for General Assemble-To-Order Systems," Production and Operations Management, Production and Operations Management Society, vol. 25(4), pages 647-661, April.
    14. Emre Nadar & Mustafa Akan & Alan Scheller-Wolf, 2014. "Technical Note---Optimal Structural Results for Assemble-to-Order Generalized M -Systems," Operations Research, INFORMS, vol. 62(3), pages 571-579, June.
    15. Mustafa K. Doğru & Martin I. Reiman & Qiong Wang, 2017. "Assemble-to-Order Inventory Management via Stochastic Programming: Chained BOMs and the M-System," Production and Operations Management, Production and Operations Management Society, vol. 26(3), pages 446-468, March.
    16. Yingdong Lu & Jing-Sheng Song & Yao Zhao, 2010. "No-Holdback Allocation Rules for Continuous-Time Assemble-to-Order Systems," Operations Research, INFORMS, vol. 58(3), pages 691-705, June.
    17. Saif Benjaafar & Mohsen ElHafsi, 2006. "Production and Inventory Control of a Single Product Assemble-to-Order System with Multiple Customer Classes," Management Science, INFORMS, vol. 52(12), pages 1896-1912, December.
    18. Geert-Jan van Houtum & Alan Scheller-Wolf & Jinxin Yi, 2007. "Optimal Control of Serial Inventory Systems with Fixed Replenishment Intervals," Operations Research, INFORMS, vol. 55(4), pages 674-687, August.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Martin Albrecht, 2021. "Component Allocation in Make-to-stock Assembly Systems," SN Operations Research Forum, Springer, vol. 2(2), pages 1-19, June.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. de Kok, Ton & Grob, Christopher & Laumanns, Marco & Minner, Stefan & Rambau, Jörg & Schade, Konrad, 2018. "A typology and literature review on stochastic multi-echelon inventory models," European Journal of Operational Research, Elsevier, vol. 269(3), pages 955-983.
    2. Atan, Zümbül & Ahmadi, Taher & Stegehuis, Clara & Kok, Ton de & Adan, Ivo, 2017. "Assemble-to-order systems: A review," European Journal of Operational Research, Elsevier, vol. 261(3), pages 866-879.
    3. ElHafsi, Mohsen & Fang, Jianxin & Hamouda, Essia, 2020. "A novel decomposition-based method for solving general-product structure assemble-to-order systems," European Journal of Operational Research, Elsevier, vol. 286(1), pages 233-249.
    4. David A. Goldberg & Martin I. Reiman & Qiong Wang, 2021. "A Survey of Recent Progress in the Asymptotic Analysis of Inventory Systems," Production and Operations Management, Production and Operations Management Society, vol. 30(6), pages 1718-1750, June.
    5. Martin Albrecht, 2021. "Component Allocation in Make-to-stock Assembly Systems," SN Operations Research Forum, Springer, vol. 2(2), pages 1-19, June.
    6. ElHafsi, Mohsen & Fang, Jianxin & Camus, Herve, 2018. "Optimal control of a continuous-time W-configuration assemble-to-order system," European Journal of Operational Research, Elsevier, vol. 267(3), pages 917-932.
    7. Lijian Lu & Jing‐Sheng Song & Hanqin Zhang, 2015. "Optimal and asymptotically optimal policies for assemble‐to‐order n‐ and W‐systems," Naval Research Logistics (NRL), John Wiley & Sons, vol. 62(8), pages 617-645, December.
    8. Willem van Jaarsveld & Alan Scheller-Wolf, 2015. "Optimization of Industrial-Scale Assemble-to-Order Systems," INFORMS Journal on Computing, INFORMS, vol. 27(3), pages 544-560, August.
    9. Karaarslan, A.G. & Kiesmüller, G.P. & de Kok, A.G., 2013. "Analysis of an assemble-to-order system with different review periods," International Journal of Production Economics, Elsevier, vol. 143(2), pages 335-341.
    10. Albrecht, Martin, 2014. "Determining near optimal base-stock levels in two-stage general inventory systems," European Journal of Operational Research, Elsevier, vol. 232(2), pages 342-349.
    11. Albrecht, Martin, 2017. "Optimization of safety stocks in models with an order service level objective or constraint," European Journal of Operational Research, Elsevier, vol. 263(3), pages 900-909.
    12. Rahimi-Ghahroodi, S. & Al Hanbali, A. & Vliegen, I.M.H. & Cohen, M.A., 2019. "Joint optimization of spare parts inventory and service engineers staffing with full backlogging," International Journal of Production Economics, Elsevier, vol. 212(C), pages 39-50.
    13. Woonghee Tim Huh & Ganesh Janakiraman, 2012. "Technical Note---On Optimal Policies for Inventory Systems with Batch Ordering," Operations Research, INFORMS, vol. 60(4), pages 797-802, August.
    14. Saif Benjaafar & Mohsen ElHafsi & Chung-Yee Lee & Weihua Zhou, 2011. "TECHNICAL NOTE---Optimal Control of an Assembly System with Multiple Stages and Multiple Demand Classes," Operations Research, INFORMS, vol. 59(2), pages 522-529, April.
    15. Levi DeValve & Saša Pekeč & Yehua Wei, 2020. "A Primal-Dual Approach to Analyzing ATO Systems," Management Science, INFORMS, vol. 66(11), pages 5389-5407, November.
    16. Lingxiu Dong & Hau L. Lee, 2003. "Optimal Policies and Approximations for a Serial Multiechelon Inventory System with Time-Correlated Demand," Operations Research, INFORMS, vol. 51(6), pages 969-980, December.
    17. Ming Hu & Yi Yang, 2014. "Modified Echelon ( r, Q ) Policies with Guaranteed Performance Bounds for Stochastic Serial Inventory Systems," Operations Research, INFORMS, vol. 62(4), pages 812-828, August.
    18. Fangruo Chen & Jing-Sheng Song, 2001. "Optimal Policies for Multiechelon Inventory Problems with Markov-Modulated Demand," Operations Research, INFORMS, vol. 49(2), pages 226-234, April.
    19. Gregory A. DeCroix, 2006. "Optimal Policy for a Multiechelon Inventory System with Remanufacturing," Operations Research, INFORMS, vol. 54(3), pages 532-543, June.
    20. Xiuli Chao & Sean X. Zhou, 2009. "Optimal Policy for a Multiechelon Inventory System with Batch Ordering and Fixed Replenishment Intervals," Operations Research, INFORMS, vol. 57(2), pages 377-390, April.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ejores:v:271:y:2018:i:1:p:80-96. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/eor .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.