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Order Fill Rate, Leadtime Variability, and Advance Demand Information in an Assemble-to-Order System

Author

Listed:
  • Yingdong Lu

    (IBM Research Division, T. J. Watson Research Center, Yorktown Heights, New York 10598)

  • Jing-Sheng Song

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

  • David D. Yao

    (Department of Industrial Engineering and Operations Research, Columbia University, New York, New York 10027)

Abstract

We study an assemble-to-order system with stochastic leadtimes for component replenishment. There are multiple product types, of which orders arrive at the system following batch Poisson processes. Base-stock policies are used to control component inventories. We analyze the system as a set of queues driven by a common, multiclass batch Poisson input, and derive the joint queue-length distribution. The result leads to simple, closed-form expressions of the first two moments, in particular the covariances, which capture the dependence structure of the system. Based on the joint distribution and the moments, we derive easy-to-compute approximations and bounds for the order fulfillment performance measures. We also examine the impact of demand and leadtime variability, and investigate the value of advance demand information.

Suggested Citation

  • Yingdong Lu & Jing-Sheng Song & David D. Yao, 2003. "Order Fill Rate, Leadtime Variability, and Advance Demand Information in an Assemble-to-Order System," Operations Research, INFORMS, vol. 51(2), pages 292-308, April.
    • Handle: RePEc:inm:oropre:v:51:y:2003:i:2:p:292-308
    DOI: 10.1287/opre.51.2.292.12781
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    References listed on IDEAS

    as
    1. Jing-Sheng Song & David D. Yao, 2002. "Performance Analysis and Optimization of Assemble-to-Order Systems with Random Lead Times," Operations Research, INFORMS, vol. 50(5), pages 889-903, October.
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    3. Jing-Sheng Song, 2002. "Order-Based Backorders and Their Implications in Multi-Item Inventory Systems," Management Science, INFORMS, vol. 48(4), pages 499-516, April.
    4. 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.
    5. Rema Hariharan & Paul Zipkin, 1995. "Customer-Order Information, Leadtimes, and Inventories," Management Science, INFORMS, vol. 41(10), pages 1599-1607, October.
    6. Jing-Sheng Song, 1998. "On the Order Fill Rate in a Multi-Item, Base-Stock Inventory System," Operations Research, INFORMS, vol. 46(6), pages 831-845, December.
    7. W. Karl Kruse, 1980. "Waiting Time in an S − 1, S Inventory System with Arbitrarily Distributed Lead Times," Operations Research, INFORMS, vol. 28(2), pages 348-352, April.
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