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A Note on Assemble-to-Order Systems with Batch Ordering

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  • Jing-Sheng Song

    () (Graduate School of Management, University of California, Irvine, California 92697)

Abstract

We study an assemble-to-order inventory system. The stocks are held for components, with final products assembled only when customer orders are realized. Customer orders form a multivariate compound Poisson process, component replenishment leadtimes are constant, and demands in excess of inventory on hand are backlogged. The component inventories are controlled by (R, nQ) policies. We show that under certain general conditions the inventory position vector has a uniform equilibrium distribution. This result generalizes the corresponding single-item theory considerably. It allows us to express the key performance measures of the system, such as order fill rates and average order-based backorders, as the averages of their counterparts in the base-stock systems.

Suggested Citation

  • Jing-Sheng Song, 2000. "A Note on Assemble-to-Order Systems with Batch Ordering," Management Science, INFORMS, vol. 46(5), pages 739-743, May.
  • Handle: RePEc:inm:ormnsc:v:46:y:2000:i:5:p:739-743
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    File URL: http://dx.doi.org/10.1287/mnsc.46.5.739.12043
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    References listed on IDEAS

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    1. Caplin, Andrew S, 1985. "The Variability of Aggregate Demand with (S, s) Inventory Policies," Econometrica, Econometric Society, vol. 53(6), pages 1395-1409, November.
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    Cited by:

    1. Jing-Sheng Song, 2002. "Order-Based Backorders and Their Implications in Multi-Item Inventory Systems," Management Science, INFORMS, pages 499-516.
    2. van Jaarsveld, Willem & Dollevoet, Twan & Dekker, Rommert, 2015. "Improving spare parts inventory control at a repair shop," Omega, Elsevier, vol. 57(PB), pages 217-229.
    3. Jing-Sheng Song & Yao Zhao, 2009. "The Value of Component Commonality in a Dynamic Inventory System with Lead Times," Manufacturing & Service Operations Management, INFORMS, pages 493-508.
    4. 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.
    5. 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.
    6. Li, Xiaoming & Sridharan, V., 2008. "Characterizing order processes of using (R,nQ) inventory policies in supply chains," Omega, Elsevier, vol. 36(6), pages 1096-1104, December.
    7. Zhao, Yao, 2009. "Analysis and evaluation of an Assemble-to-Order system with batch ordering policy and compound Poisson demand," European Journal of Operational Research, Elsevier, vol. 198(3), pages 800-809, November.

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