We found a match
Your institution may have access to this item. Find your institution then sign in to continue.
- Title
Optimal Component Stocking Policy for Assemble-to-Order Systems with Lead-Time-Dependent Component and Product Pricing.
- Authors
Hsu, Vernon Ninh; Lee, Chung Yee; So, Kut C.
- Abstract
Short delivery time and the efficient management of component inventories are two crucial elements that determine the competitiveness of many contract assembly manufacturers, especially in the electronics industry. In this paper, we develop and analyze an optimization model to determine the optimal stocking quantities for components of an assemble-to-order product in an environment where demand is uncertain and the price for the final product and the costs of components depend on their delivery lead times. We provide an efficient solution procedure to solve the problem in which the manufacturer must deliver the full order quantity possibly in multiple shipments. We further extend our model to the situation where the manufacturer has the option of not delivering the full quantity but instead takes the penalty for a delivery shortage. We derive some analytical results that illustrate how different model parameters affect the optimal solution and provide useful insights for managing components in the assemble-to-order environment.
- Subjects
ASSEMBLE-to-order systems; MATERIAL requirements planning; INVENTORY control; LEAD time (Supply chain management); MANUFACTURING processes; SHIPMENT of goods; PRICING; CONTRACT electronics manufacturers; JUST-in-time systems; OFFSHORE assembly industry; ASSEMBLY line methods; MANUFACTURING resource planning; PRODUCTION planning; INVENTORY management systems; ECONOMICS
- Publication
Management Science, 2006, Vol 52, Issue 3, p337
- ISSN
0025-1909
- Publication type
Article
- DOI
10.1287/mnsc.1050.0438