IDEAS home Printed from https://ideas.repec.org/a/eee/ejores/v211y2011i1p57-65.html
   My bibliography  Save this article

Component rationing for available-to-promise scheduling in configure-to-order systems

Author

Listed:
  • Chen-Ritzo, Ching-Hua
  • Ervolina, Tom
  • Harrison, Terry P.
  • Gupta, Barun

Abstract

We address the problem of rationing common components among multiple products in a configure-to-order system with order configuration uncertainty. The objective of this problem is to maximize expected revenue by implementing a threshold rationing policy. Under this policy, a product is available to promise if fulfilling the order for the product will not cause the inventory of any one of its required components to fall below the component's threshold level for that product. The problem is modeled as a two-stage stochastic integer program and solved using the sample average approximation approach. A heuristic is developed to generate good feasible solutions and lower bound estimates. Using industry data, we examine the benefit of component rationing as compared to a First-Come-First-Served policy and show that this benefit is correlated to the average revenue per product and the variability in the revenue across products whose components are constrained.

Suggested Citation

  • Chen-Ritzo, Ching-Hua & Ervolina, Tom & Harrison, Terry P. & Gupta, Barun, 2011. "Component rationing for available-to-promise scheduling in configure-to-order systems," European Journal of Operational Research, Elsevier, vol. 211(1), pages 57-65, May.
    • Handle: RePEc:eee:ejores:v:211:y:2011:i:1:p:57-65
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0377-2217(10)00755-1
    Download Restriction: Full text for ScienceDirect subscribers only
    ---><---

    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. Morris A. Cohen & Paul R. Kleindorfer & Hau L. Lee, 1988. "Service Constrained (s, S) Inventory Systems with Priority Demand Classes and Lost Sales," Management Science, INFORMS, vol. 34(4), pages 482-499, April.
    2. ElHafsi, Mohsen, 2009. "Optimal integrated production and inventory control of an assemble-to-order system with multiple non-unitary demand classes," European Journal of Operational Research, Elsevier, vol. 194(1), pages 127-142, April.
    3. Donald M. Topkis, 1968. "Optimal Ordering and Rationing Policies in a Nonstationary Dynamic Inventory Model with n Demand Classes," Management Science, INFORMS, vol. 15(3), pages 160-176, November.
    4. Vinayak Deshpande & Morris A. Cohen & Karen Donohue, 2003. "A Threshold Inventory Rationing Policy for Service-Differentiated Demand Classes," Management Science, INFORMS, vol. 49(6), pages 683-703, June.
    5. Steven Nahmias & W. Steven Demmy, 1981. "Operating Characteristics of an Inventory System with Rationing," Management Science, INFORMS, vol. 27(11), pages 1236-1245, November.
    6. Yalçin Akçay & Susan H. Xu, 2004. "Joint Inventory Replenishment and Component Allocation Optimization in an Assemble-to-Order System," Management Science, INFORMS, vol. 50(1), pages 99-116, January.
    7. Arthur F. Veinott, 1965. "Optimal Policy in a Dynamic, Single Product, Nonstationary Inventory Model with Several Demand Classes," Operations Research, INFORMS, vol. 13(5), pages 761-778, October.
    8. Jeff Linderoth & Alexander Shapiro & Stephen Wright, 2006. "The empirical behavior of sampling methods for stochastic programming," Annals of Operations Research, Springer, vol. 142(1), pages 215-241, February.
    9. Albert Y. Ha, 1997. "Inventory Rationing in a Make-to-Stock Production System with Several Demand Classes and Lost Sales," Management Science, INFORMS, vol. 43(8), pages 1093-1103, August.
    10. Grace Y. Lin & Yingdong Lu & David D. Yao, 2008. "The Stochastic Knapsack Revisited: Switch-Over Policies and Dynamic Pricing," Operations Research, INFORMS, vol. 56(4), pages 945-957, August.
    11. Teunter, Ruud H. & Klein Haneveld, Willem K., 2008. "Dynamic inventory rationing strategies for inventory systems with two demand classes, Poisson demand and backordering," European Journal of Operational Research, Elsevier, vol. 190(1), pages 156-178, October.
    12. Francis de Véricourt & Fikri Karaesmen & Yves Dallery, 2001. "Assessing the Benefits of Different Stock-Allocation Policies for a Make-to-Stock Production System," Manufacturing & Service Operations Management, INFORMS, vol. 3(2), pages 105-121, December.
    13. 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.
    14. Ayanso, Anteneh & Diaby, Moustapha & Nair, Suresh K., 2006. "Inventory rationing via drop-shipping in Internet retailing: A sensitivity analysis," European Journal of Operational Research, Elsevier, vol. 171(1), pages 135-152, May.
    15. Yigal Gerchak & Michael J. Magazine & A. Bruce Gamble, 1988. "Component Commonality with Service Level Requirements," Management Science, INFORMS, vol. 34(6), pages 753-760, June.
    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. Pinto, Roberto, 2012. "Stock rationing under service level constraints in a vertically integrated distribution system," International Journal of Production Economics, Elsevier, vol. 136(1), pages 231-240.
    2. Han, Guanghua & Dong, Ming & Liu, Shaoxuan, 2014. "Yield and allocation management in a continuous make-to-stock system with demand upgrade substitution," International Journal of Production Economics, Elsevier, vol. 156(C), pages 124-131.

    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. ElHafsi, Mohsen & Fang, Jianxin & Hamouda, Essia, 2021. "Optimal production and inventory control of multi-class mixed backorder and lost sales demand class models," European Journal of Operational Research, Elsevier, vol. 291(1), pages 147-161.
    2. Mohammad Najjartabar Bisheh & G. Reza Nasiri & Esmaeil Esmaeili & Hamid Davoudpour & Shing I. Chang, 2022. "A new supply chain distribution network design for two classes of customers using transfer recurrent neural network," International Journal of System Assurance Engineering and Management, Springer;The Society for Reliability, Engineering Quality and Operations Management (SREQOM),India, and Division of Operation and Maintenance, Lulea University of Technology, Sweden, vol. 13(5), pages 2604-2618, October.
    3. Bing Lin & Shaoxiang Chen & Yi Feng & Jianjun Xu, 2018. "The Joint Stock and Capacity Rationings of a Make-To-Stock System with Flexible Demand," Asia-Pacific Journal of Operational Research (APJOR), World Scientific Publishing Co. Pte. Ltd., vol. 35(01), pages 1-27, February.
    4. ElHafsi, Mohsen & Camus, Herve & Craye, Etienne, 2010. "Managing an integrated production inventory system with information on the production and demand status and multiple non-unitary demand classes," European Journal of Operational Research, Elsevier, vol. 207(2), pages 986-1001, December.
    5. Alfieri, Arianna & Pastore, Erica & Zotteri, Giulio, 2017. "Dynamic inventory rationing: How to allocate stock according to managerial priorities. An empirical study," International Journal of Production Economics, Elsevier, vol. 189(C), pages 14-29.
    6. Teunter, Ruud H. & Klein Haneveld, Willem K., 2008. "Dynamic inventory rationing strategies for inventory systems with two demand classes, Poisson demand and backordering," European Journal of Operational Research, Elsevier, vol. 190(1), pages 156-178, October.
    7. Quan-Lin Li & Yi-Meng Li & Jing-Yu Ma & Heng-Li Liu, 2023. "A complete algebraic solution to the optimal dynamic rationing policy in the stock-rationing queue with two demand classes," Journal of Combinatorial Optimization, Springer, vol. 45(3), pages 1-54, April.
    8. Hung, Yi-Feng & Hsiao, Jui-Yi, 2013. "Inventory rationing decision models during replenishment lead time," International Journal of Production Economics, Elsevier, vol. 144(1), pages 290-300.
    9. Tan, Tarkan & Güllü, Refik & Erkip, Nesim, 2009. "Using imperfect advance demand information in ordering and rationing decisions," International Journal of Production Economics, Elsevier, vol. 121(2), pages 665-677, October.
    10. Jean-Philippe Gayon & Saif Benjaafar & Francis de Véricourt, 2009. "Using Imperfect Advance Demand Information in Production-Inventory Systems with Multiple Customer Classes," Manufacturing & Service Operations Management, INFORMS, vol. 11(1), pages 128-143, July.
    11. FadIloglu, Mehmet Murat & Bulut, Önder, 2010. "A dynamic rationing policy for continuous-review inventory systems," European Journal of Operational Research, Elsevier, vol. 202(3), pages 675-685, May.
    12. Saif Benjaafar & Mohsen ElHafsi & Tingliang Huang, 2010. "Optimal control of a production‐inventory system with both backorders and lost sales," Naval Research Logistics (NRL), John Wiley & Sons, vol. 57(3), pages 252-265, April.
    13. Xu, Jianjun & Serrano, Alejandro & Lin, Bing, 2017. "Optimal production and rationing policy of two-stage tandem production system," International Journal of Production Economics, Elsevier, vol. 185(C), pages 100-112.
    14. Karin T. Möllering & Ulrich W. Thonemann, 2008. "An optimal critical level policy for inventory systems with two demand classes," Naval Research Logistics (NRL), John Wiley & Sons, vol. 55(7), pages 632-642, October.
    15. Berling, Peter & Johansson, Lina & Marklund, Johan, 2023. "Controlling inventories in omni/multi-channel distribution systems with variable customer order-sizes," Omega, Elsevier, vol. 114(C).
    16. Liu, Shudong & Song, Miao & Tan, Kok Choon & Zhang, Changyong, 2015. "Multi-class dynamic inventory rationing with stochastic demands and backordering," European Journal of Operational Research, Elsevier, vol. 244(1), pages 153-163.
    17. Samii, Amir-Behzad & Pibernik, Richard & Yadav, Prashant & Vereecke, Ann, 2012. "Reservation and allocation policies for influenza vaccines," European Journal of Operational Research, Elsevier, vol. 222(3), pages 495-507.
    18. Shaoxiang Chen & Jianjun Xu & Youyi Feng, 2010. "A partial characterization of the optimal ordering/rationing policy for a periodic review system with two demand classes and backordering," Naval Research Logistics (NRL), John Wiley & Sons, vol. 57(4), pages 330-341, June.
    19. Ayanso, Anteneh & Diaby, Moustapha & Nair, Suresh K., 2006. "Inventory rationing via drop-shipping in Internet retailing: A sensitivity analysis," European Journal of Operational Research, Elsevier, vol. 171(1), pages 135-152, May.
    20. Zümbül Atan & Lawrence V. Snyder & George R. Wilson, 2018. "Transshipment policies for systems with multiple retailers and two demand classes," OR Spectrum: Quantitative Approaches in Management, Springer;Gesellschaft für Operations Research e.V., vol. 40(1), pages 159-186, January.

    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:211:y:2011:i:1:p:57-65. 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.