IDEAS home Printed from https://ideas.repec.org/a/eee/proeco/v123y2010i1p155-165.html
   My bibliography  Save this article

Optimal decisions for assemble-to-order systems with uncertain assembly capacity

Author

Listed:
  • Xiao, Yongbo
  • Chen, Jian
  • Lee, Chung-Yee

Abstract

In this paper we study a single-product, single-period assemble-to-order (ATO) model with uncertain assembly capacity. To reduce the risk/cost, the manufacturer may need to assemble in advance. Also, when the demand is realized, he/she may need to place emergency component orders. We present a profit-maximization model that makes optimal inventory and production decisions. We establish structural properties of the optimal solutions, and identify the sufficient and necessary condition under which assemble-in-advance strategy should be adopted. We further extend the model to the situation where assembly outsourcing can be used to make up for the capacity shortage. Numerical experiments are conducted to show the impact of uncertainties associated with demand and capacity.

Suggested Citation

  • Xiao, Yongbo & Chen, Jian & Lee, Chung-Yee, 2010. "Optimal decisions for assemble-to-order systems with uncertain assembly capacity," International Journal of Production Economics, Elsevier, vol. 123(1), pages 155-165, January.
    • Handle: RePEc:eee:proeco:v:123:y:2010:i:1:p:155-165
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0925-5273(09)00274-6
    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. 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.
    2. George Tagaras & Dimitrios Vlachos, 2001. "A Periodic Review Inventory System with Emergency Replenishments," Management Science, INFORMS, vol. 47(3), pages 415-429, March.
    3. Jing-Sheng Song & Susan H. Xu & Bin Liu, 1999. "Order-Fulfillment Performance Measures in an Assemble-to-Order System with Stochastic Leadtimes," Operations Research, INFORMS, vol. 47(1), pages 131-149, February.
    4. Yunzeng Wang & Yigal Gerchak, 2003. "Capacity Games in Assembly Systems with Uncertain Demand," Manufacturing & Service Operations Management, INFORMS, vol. 5(3), pages 252-267, January.
    5. 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.
    6. Tsai, Kune-muh & Wang, Shan-chi, 2009. "Multi-site available-to-promise modeling for assemble-to-order manufacturing: An illustration on TFT-LCD manufacturing," International Journal of Production Economics, Elsevier, vol. 117(1), pages 174-184, January.
    7. Jayashankar M. Swaminathan & Sridhar R. Tayur, 1998. "Managing Broader Product Lines through Delayed Differentiation Using Vanilla Boxes," Management Science, INFORMS, vol. 44(12-Part-2), pages 161-172, December.
    8. 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.
    9. Patrik Alfredsson & Jos Verrijdt, 1999. "Modeling Emergency Supply Flexibility in a Two-Echelon Inventory System," Management Science, INFORMS, vol. 45(10), pages 1416-1431, October.
    10. Jing-Sheng Song & Candace A. Yano & Panupol Lerssrisuriya, 2000. "Contract Assembly: Dealing with Combined Supply Lead Time and Demand Quantity Uncertainty," Manufacturing & Service Operations Management, INFORMS, vol. 2(3), pages 287-296, July.
    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. Gao, Chunyan & Shen, Houcai & Cheng, T.C.E., 2010. "Order-fulfillment performance analysis of an assemble-to-order system with unreliable machines," International Journal of Production Economics, Elsevier, vol. 126(2), pages 341-349, August.
    2. Guo Li & Hui Mao & Lei Xiao, 2017. "Impacts of Leader–Follower Structure on Pricing and Production Strategies in a Decentralized Assembly System," Asia-Pacific Journal of Operational Research (APJOR), World Scientific Publishing Co. Pte. Ltd., vol. 34(01), pages 1-24, February.
    3. Fei Zhang & Zailin Guan & Li Zhang & Yanyan Cui & Pengxing Yi & Saif Ullah, 2019. "Inventory management for a remanufacture-to-order production with multi-components (parts)," Journal of Intelligent Manufacturing, Springer, vol. 30(1), pages 59-78, January.
    4. 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.
    5. Xiao, Tiaojun & (Junmin) Shi, Jim, 2016. "Pricing and supply priority in a dual-channel supply chain," European Journal of Operational Research, Elsevier, vol. 254(3), pages 813-823.
    6. Li, Yanhai & Ou, Jinwen, 2020. "Optimal ordering policy for complementary components with partial backordering and emergency replenishment under spectral risk measure," European Journal of Operational Research, Elsevier, vol. 284(2), pages 538-549.
    7. Heydari, Jafar & Govindan, Kannan & Sadeghi, Razieh, 2018. "Reverse supply chain coordination under stochastic remanufacturing capacity," International Journal of Production Economics, Elsevier, vol. 202(C), pages 1-11.
    8. Mohammed Hichame Benbitour & Evren Sahin & Yves Dallery, 2019. "The use of rush deliveries in periodic review assemble-to-order systems," Post-Print hal-01997380, HAL.
    9. Lin, Junyi & Naim, Mohamed M. & Spiegler, Virginia L.M., 2020. "Delivery time dynamics in an assemble-to-order inventory and order based production control system," International Journal of Production Economics, Elsevier, vol. 223(C).
    10. Xu Guan & Guo Li & Zhe Yin, 2016. "The implication of time-based payment contract in the decentralized assembly system," Annals of Operations Research, Springer, vol. 240(2), pages 641-659, May.
    11. Golmohammadi, Amirmohsen & Taghavi, Majid & Farivar, Samira & Azad, Nader, 2018. "Three strategies for engaging a buyer in supplier development efforts," International Journal of Production Economics, Elsevier, vol. 206(C), pages 1-14.

    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. 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.
    2. 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.
    3. Vernon Ning Hsu & Chung Yee Lee & Kut C. So, 2007. "Managing components for assemble‐to‐order products with lead‐time‐dependent pricing: The full‐shipment model," Naval Research Logistics (NRL), John Wiley & Sons, vol. 54(5), pages 510-523, August.
    4. Xiang Fang & Kut C. So & Yunzeng Wang, 2008. "Component Procurement Strategies in Decentralized Assemble-to-Order Systems with Time-Dependent Pricing," Management Science, INFORMS, vol. 54(12), pages 1997-2011, December.
    5. 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.
    6. 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.
    7. Jing-Sheng Song & Yao Zhao, 2009. "The Value of Component Commonality in a Dynamic Inventory System with Lead Times," Manufacturing & Service Operations Management, INFORMS, vol. 11(3), pages 493-508, March.
    8. Ke Fu & Vernon N. Hsu & Chung-Yee Lee, 2009. "Note--Optimal Component Acquisition for a Single-Product, Single-Demand Assemble-to-Order Problem with Expediting," Manufacturing & Service Operations Management, INFORMS, vol. 11(2), pages 229-236, December.
    9. 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.
    10. 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.
    11. Fernando Bernstein & Gregory A. DeCroix & Yulan Wang, 2011. "The Impact of Demand Aggregation Through Delayed Component Allocation in an Assemble-to-Order System," Management Science, INFORMS, vol. 57(6), pages 1154-1171, June.
    12. Jie Chu & Kai Huang, 2020. "Integrating decisions with advance supply information in an assemble‐to‐order system," Naval Research Logistics (NRL), John Wiley & Sons, vol. 67(1), pages 34-44, February.
    13. 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.
    14. Song, Zhe & Kusiak, Andrew, 2010. "Mining Pareto-optimal modules for delayed product differentiation," European Journal of Operational Research, Elsevier, vol. 201(1), pages 123-128, February.
    15. Svoboda, Josef & Minner, Stefan & Yao, Man, 2021. "Typology and literature review on multiple supplier inventory control models," European Journal of Operational Research, Elsevier, vol. 293(1), pages 1-23.
    16. Senthil Veeraraghavan & Alan Scheller-Wolf, 2008. "Now or Later: A Simple Policy for Effective Dual Sourcing in Capacitated Systems," Operations Research, INFORMS, vol. 56(4), pages 850-864, August.
    17. 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.
    18. Yao Zhao & David Simchi-Levi, 2006. "Performance Analysis and Evaluation of Assemble-to-Order Systems with Stochastic Sequential Lead Times," Operations Research, INFORMS, vol. 54(4), pages 706-724, August.
    19. Mohammed Hichame Benbitour & Evren Sahin & Yves Dallery, 2019. "The use of rush deliveries in periodic review assemble-to-order systems," Post-Print hal-01997380, HAL.
    20. Minner, Stefan, 2003. "Multiple-supplier inventory models in supply chain management: A review," International Journal of Production Economics, Elsevier, vol. 81(1), pages 265-279, 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:proeco:v:123:y:2010:i:1:p:155-165. 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/ijpe .

    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.