IDEAS home Printed from https://ideas.repec.org/a/spr/operea/v21y2021i1d10.1007_s12351-018-0441-y.html
   My bibliography  Save this article

Effects of component commonality and perishability on inventory control in assemble-to-order systems

Author

Listed:
  • Yeu-Shiang Huang

    (National Cheng Kung University)

  • Hau-Wen Lo

    (National Cheng Kung University)

  • Jyh-Wen Ho

    (Aletheia University)

Abstract

The perishable inventories in the research are often viewed as an item to think over the optimal ordering quantity, instead of a part to perform an assembly process. For the products made of both perishable and non-perishable components, they cannot be simply dealt with by a series of newsvendor models. In this study, an inventory control problem in an assemble-to-order production system is considered in which a common component and two perishable ones with different durabilities are assembled into two products. An inventory policy is established for the availability of the nonperishable common component and the backorders of the two products at the beginning of a period, so as to determine the optimal ordering strategies of the common component and the two perishable ones. Also, a dynamic programming approach is used to address the multi-period problem concerning the lifetime of the perishable components with the relevant costs. The proposed approach enhances profits by avoiding losses caused by inappropriate inventory allocation of perishable and common components in assembly process, which shows its effectiveness demonstrated through numerical application.

Suggested Citation

  • Yeu-Shiang Huang & Hau-Wen Lo & Jyh-Wen Ho, 2021. "Effects of component commonality and perishability on inventory control in assemble-to-order systems," Operational Research, Springer, vol. 21(1), pages 205-229, March.
    • Handle: RePEc:spr:operea:v:21:y:2021:i:1:d:10.1007_s12351-018-0441-y
    DOI: 10.1007/s12351-018-0441-y
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s12351-018-0441-y
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s12351-018-0441-y?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. Khouja, Moutaz, 1999. "The single-period (news-vendor) problem: literature review and suggestions for future research," Omega, Elsevier, vol. 27(5), pages 537-553, October.
    3. S. Panda & S. Saha & M. Basu, 2009. "An EOQ model for perishable products with discounted selling price and stock dependent demand," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 17(1), pages 31-53, March.
    4. Yingdong Lu & Jing-Sheng Song, 2005. "Order-Based Cost Optimization in Assemble-to-Order Systems," Operations Research, INFORMS, vol. 53(1), pages 151-169, February.
    5. Vernon Ning Hsu & Chung Yee Lee & Kut C. So, 2006. "Optimal Component Stocking Policy for Assemble-to-Order Systems with Lead-Time-Dependent Component and Product Pricing," Management Science, INFORMS, vol. 52(3), pages 337-351, March.
    6. Z. Sazvar & K. Govindan & B. Bahli & Seyed Mohammad Javad Mirzapour Al-E-Hashem, 2016. "A novel mathematical model for a multi-period, multi-product optimal ordering problem considering expiry dates in a FEFO system," Post-Print hal-02010825, HAL.
    7. Oh, Yosep & Behdad, Sara, 2017. "Simultaneous reassembly and procurement planning in assemble-to-order remanufacturing systems," International Journal of Production Economics, Elsevier, vol. 184(C), pages 168-178.
    8. Hill, R.M. & Pakkala, T.P.M., 2007. "Base stock inventory policies for a multi-item demand process," International Journal of Production Economics, Elsevier, vol. 109(1-2), pages 137-148, September.
    9. Christian van Delft & A. Cheaitou y, 2009. "Two-period production planning and inventory control," Post-Print hal-00491696, HAL.
    10. Emre Berk & Ülkü Gürler, 2008. "Analysis of the ( Q , r ) Inventory Model for Perishables with Positive Lead Times and Lost Sales," Operations Research, INFORMS, vol. 56(5), pages 1238-1246, October.
    11. Sazvar, Z. & Mirzapour Al-e-hashem, S.M.J. & Govindan, K. & Bahli, B., 2016. "A novel mathematical model for a multi-period, multi-product optimal ordering problem considering expiry dates in a FEFO system," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 93(C), pages 232-261.
    12. Yigal Gerchak & Mordechai Henig, 1989. "Component commonality in assemble‐to‐order systems: Models and properties," Naval Research Logistics (NRL), John Wiley & Sons, vol. 36(1), pages 61-68, February.
    13. Williams, Craig L. & Patuwo, B. Eddy, 1999. "A perishable inventory model with positive order lead times," European Journal of Operational Research, Elsevier, vol. 116(2), pages 352-373, July.
    14. Mohebbi, E. & Choobineh, F., 2005. "The impact of component commonality in an assemble-to-order environment under supply and demand uncertainty," Omega, Elsevier, vol. 33(6), pages 472-482, December.
    15. 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.
    16. Steven Nahmias, 1982. "Perishable Inventory Theory: A Review," Operations Research, INFORMS, vol. 30(4), pages 680-708, August.
    17. Skouri, K. & Konstantaras, I. & Papachristos, S. & Ganas, I., 2009. "Inventory models with ramp type demand rate, partial backlogging and Weibull deterioration rate," European Journal of Operational Research, Elsevier, vol. 192(1), pages 79-92, January.
    18. Hillier, Mark S., 2002. "The costs and benefits of commonality in assemble-to-order systems with a (Q,r)-policy for component replenishment," European Journal of Operational Research, Elsevier, vol. 141(3), pages 570-586, September.
    19. I Moon & E A Silver, 2000. "The multi-item newsvendor problem with a budget constraint and fixed ordering costs," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 51(5), pages 602-608, May.
    20. Kaj Rosling, 1989. "Optimal Inventory Policies for Assembly Systems Under Random Demands," Operations Research, INFORMS, vol. 37(4), pages 565-579, August.
    21. Fujiwara, Okitsugu & Sedarage, Dayani, 1997. "An optimal (Q,r) policy for a multipart assembly system under stochastic part procurement lead times," European Journal of Operational Research, Elsevier, vol. 100(3), pages 550-556, August.
    22. Katia C. Frank & Hyun‐Soo Ahn & Rachel Q. Zhang, 2009. "Inventory policies for a make‐to‐order system with a perishable component and fixed ordering cost," Naval Research Logistics (NRL), John Wiley & Sons, vol. 56(2), pages 127-141, March.
    23. Richard Ehrhardt, 1984. "( s , S ) Policies for a Dynamic Inventory Model with Stochastic Lead Times," Operations Research, INFORMS, vol. 32(1), pages 121-132, February.
    24. Matthew J. Sobel & Rachel Q. Zhang, 2001. "Inventory Policies for Systems with Stochastic and Deterministic Demand," Operations Research, INFORMS, vol. 49(1), pages 157-162, February.
    25. A. Federgruen & P. Zipkin, 1986. "An Inventory Model with Limited Production Capacity and Uncertain Demands II. The Discounted-Cost Criterion," Mathematics of Operations Research, INFORMS, vol. 11(2), pages 208-215, May.
    26. A. Federgruen & P. Zipkin, 1986. "An Inventory Model with Limited Production Capacity and Uncertain Demands I. The Average-Cost Criterion," Mathematics of Operations Research, INFORMS, vol. 11(2), pages 193-207, May.
    27. Hausman, Warren H. & Lee, Hau L. & Zhang, Alex X., 1998. "Joint demand fulfillment probability in a multi-item inventory system with independent order-up-to policies," European Journal of Operational Research, Elsevier, vol. 109(3), pages 646-659, September.
    28. Christian van Delft & Ali Cheaitoua & Yves Dallery & Z. Jemai, 2009. "Two-period production planning and inventory control," Post-Print hal-00471430, HAL.
    29. Manna, S.K. & Chaudhuri, K.S., 2006. "An EOQ model with ramp type demand rate, time dependent deterioration rate, unit production cost and shortages," European Journal of Operational Research, Elsevier, vol. 171(2), pages 557-566, June.
    30. Cheaitou, Ali & van Delft, Christian & Dallery, Yves & Jemai, Zied, 2009. "Two-period production planning and inventory control," International Journal of Production Economics, Elsevier, vol. 118(1), pages 118-130, March.
    31. Ke Fu & Vernon Ning Hsu & Chung-Yee Lee, 2006. "Inventory and Production Decisions for an Assemble-to-Order System with Uncertain Demand and Limited Assembly Capacity," Operations Research, INFORMS, vol. 54(6), pages 1137-1150, December.
    32. Kenneth R. Baker & Michael J. Magazine & Henry L. W. Nuttle, 1986. "The Effect of Commonality on Safety Stock in a Simple Inventory Model," Management Science, INFORMS, vol. 32(8), pages 982-988, August.
    33. Chiang, Chi, 2006. "Optimal ordering policies for periodic-review systems with replenishment cycles," European Journal of Operational Research, Elsevier, vol. 170(1), pages 44-56, April.
    34. Alex X. Zhang, 1997. "Demand Fulfillment Rates In An Assembleto‐ Order System With Multiple Products And Dependent Demands," Production and Operations Management, Production and Operations Management Society, vol. 6(3), pages 309-324, September.
    35. Fujiwara, Okitsugu & Soewandi, Hanijanto & Sedarage, Dayani, 1997. "An optimal ordering and issuing policy for a two-stage inventory system for perishable products," European Journal of Operational Research, Elsevier, vol. 99(2), pages 412-424, June.
    Full references (including those not matched with items on IDEAS)

    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. 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.
    2. 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.
    3. Katia C. Frank & Hyun‐Soo Ahn & Rachel Q. Zhang, 2009. "Inventory policies for a make‐to‐order system with a perishable component and fixed ordering cost," Naval Research Logistics (NRL), John Wiley & Sons, vol. 56(2), pages 127-141, March.
    4. 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.
    5. 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.
    6. Yingdong Lu & Jing-Sheng Song, 2005. "Order-Based Cost Optimization in Assemble-to-Order Systems," Operations Research, INFORMS, vol. 53(1), pages 151-169, February.
    7. 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.
    8. Paul Zipkin, 2008. "On the Structure of Lost-Sales Inventory Models," Operations Research, INFORMS, vol. 56(4), pages 937-944, August.
    9. van Houtum, G. J. & Inderfurth, K. & Zijm, W. H. M., 1996. "Materials coordination in stochastic multi-echelon systems," European Journal of Operational Research, Elsevier, vol. 95(1), pages 1-23, November.
    10. Cheaitou, Ali & Cheaytou, Rima, 2019. "A two-stage capacity reservation supply contract with risky supplier and forecast updating," International Journal of Production Economics, Elsevier, vol. 209(C), pages 42-60.
    11. Kai Huang, 2014. "Benchmarking non-first-come-first-served component allocation in an assemble-to-order system," Annals of Operations Research, Springer, vol. 223(1), pages 217-237, December.
    12. 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.
    13. van Jaarsveld, W.L. & Dollevoet, T.A.B., 2011. "Spare parts inventory control for an aircraft component repair shop," Econometric Institute Research Papers EI2011-24, Erasmus University Rotterdam, Erasmus School of Economics (ESE), Econometric Institute.
    14. Yao Zhao, 2008. "Evaluation and Optimization of Installation Base-Stock Policies in Supply Chains with Compound Poisson Demand," Operations Research, INFORMS, vol. 56(2), pages 437-452, April.
    15. Sandun C. Perera & Suresh P. Sethi, 2023. "A survey of stochastic inventory models with fixed costs: Optimality of (s, S) and (s, S)‐type policies—Continuous‐time case," Production and Operations Management, Production and Operations Management Society, vol. 32(1), pages 154-169, January.
    16. 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.
    17. Alex X. Zhang, 1997. "Demand Fulfillment Rates In An Assembleto‐ Order System With Multiple Products And Dependent Demands," Production and Operations Management, Production and Operations Management Society, vol. 6(3), pages 309-324, September.
    18. Susan H. Xu & Zhaolin Li, 2007. "Managing a Single-Product Assemble-to-Order System with Technology Innovations," Management Science, INFORMS, vol. 53(9), pages 1467-1485, September.
    19. Alain Bensoussan & Lama Moussawi-Haidar & Metin Çakanyıldırım, 2010. "Inventory control with an order-time constraint: optimality, uniqueness and significance," Annals of Operations Research, Springer, vol. 181(1), pages 603-640, December.
    20. Jian Yang, 2004. "Production Control in the Face of Storable Raw Material, Random Supply, and an Outside Market," Operations Research, INFORMS, vol. 52(2), pages 293-311, 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:spr:operea:v:21:y:2021:i:1:d:10.1007_s12351-018-0441-y. 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: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    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.