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The use of rush deliveries in periodic review assemble-to-order systems

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  • Mohammed Hichame Benbitour
  • Evren Sahin
  • Yves Dallery

Abstract

We calculate optimal safety stock in a periodic review (T,S) assemble-to-order system having multiple components and multiple finished goods (FGs). Customer orders for FGs arrive according to independent Poisson processes, and cannot be neither backlogged nor lost. In case of potential component stock-out, the studied system uses rush deliveries from suppliers. For this setting, approximate expressions of the optimal safety stock that minimise the sum of inventory holding and rush ordering costs are developed. Exact optimal safety stocks are calculated using Discrete Event Simulation, and compared numerically to the approximate expressions. The model is applied to a first-tier automotive supplier and yields to a significant reduction in terms of inventory holding and rush ordering costs. A sensitivity analysis on relevant system parameters such as components demand, assembly coefficients and unit rush ordering cost is conducted.

Suggested Citation

  • Mohammed Hichame Benbitour & Evren Sahin & Yves Dallery, 2019. "The use of rush deliveries in periodic review assemble-to-order systems," International Journal of Production Research, Taylor & Francis Journals, vol. 57(13), pages 4078-4097, July.
    • Handle: RePEc:taf:tprsxx:v:57:y:2019:i:13:p:4078-4097
    DOI: 10.1080/00207543.2018.1505059
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    Cited by:

    1. Barros, Júlio & Cortez, Paulo & Carvalho, M. Sameiro, 2021. "A systematic literature review about dimensioning safety stock under uncertainties and risks in the procurement process," Operations Research Perspectives, Elsevier, vol. 8(C).
    2. Gonçalves, João N.C. & Sameiro Carvalho, M. & Cortez, Paulo, 2020. "Operations research models and methods for safety stock determination: A review," Operations Research Perspectives, Elsevier, vol. 7(C).

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