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Assemble to order and assemble in advance in a single‐period stochastic environment

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  • Amit Eynan
  • Meir J. Rosenblatt

Abstract

Faced with stochastic demand, a firm may decide to assemble its products in advance or assemble them once actual demand is realized. In general, the production cost for items assembled in advance (AIA) is lower than for items assembled to order (ATO), because there is no need to expedite, and the production process can be planned and executed well in advance. On the other hand, items assembled in advance (AIA) for which there is no demand incur excessive and unnecessary assembly costs. The two policies, AIA and ATO, as well as a composite one, are compared and analyzed in light of these trade‐offs. The composite model, which is shown as the dominating policy, is also extended to deal with the following two scenarios. The first assumes a loss of a fraction of the demand when demand cannot be satisfied from the shelf but rather through ATO. The second considers the effects of budget constraints on the total inventory cost. © 1995 John Wiley & Sons, Inc.

Suggested Citation

  • Amit Eynan & Meir J. Rosenblatt, 1995. "Assemble to order and assemble in advance in a single‐period stochastic environment," Naval Research Logistics (NRL), John Wiley & Sons, vol. 42(5), pages 861-872, August.
    • Handle: RePEc:wly:navres:v:42:y:1995:i:5:p:861-872
    DOI: 10.1002/1520-6750(199508)42:53.0.CO;2-X
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    References listed on IDEAS

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    1. Robert C. Carlson & James V. Jucker & Dean H. Kropp, 1979. "Less Nervous MRP Systems: A Dynamic Economic Lot-Sizing Approach," Management Science, INFORMS, vol. 25(8), pages 754-761, August.
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    Cited by:

    1. Mofidi, Seyed Shahab & Pazour, Jennifer A. & Roy, Debjit, 2018. "Proactive vs. reactive order-fulfillment resource allocation for sea-based logistics," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 114(C), pages 66-84.
    2. Chia‐Shin Chung & James Flynn & Piotr Stalinski, 2001. "A single‐period inventory placement problem for a serial supply chain," Naval Research Logistics (NRL), John Wiley & Sons, vol. 48(6), pages 506-517, September.
    3. Moncer Hariga, 1998. "A single‐period, multi‐echelon stochastic model under a mix of assemble to order and assemble in advance policies," Naval Research Logistics (NRL), John Wiley & Sons, vol. 45(6), pages 599-614, September.
    4. Amit Eynan & Meir J. Rosenblatt, 2007. "The impact of component commonality on composite assembly policies," Naval Research Logistics (NRL), John Wiley & Sons, vol. 54(6), pages 615-622, September.
    5. 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.

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