An independent inventory control heuristic for multi-component assemble-to-order systems. (11th March 2010)

• Record Type: Journal Article
• Authors: Yang, Bibo; Geunes, Joseph
• Is Part Of: International journal of operational research. Volume 7:Number 3(2010)
• Page Start: 297
• Page End: 313
• Publication Date: 2010-03-11
• Subjects: assemble-to-order -- assembly systems -- heuristics -- inventory control -- order-up-to policy -- periodic review -- safety stock -- stock out -- component replenishment lead times; Operations research -- Periodicals; 003.05
• Languages: English
• ISSNs: 1745-7645

Abstract

This article investigates an inventory control problem in a single-level multi-component assembly system. In this system, a product with random demand is assembled-to-order from a number of components. The assembler holds inventory at the component levels. We consider a periodic review inventory control system that uses an order-up-to policy for each component. Component safety stock is held to protect against the stock out risk during component replenishment lead times. We develop a linear approximation heuristic to minimise expected holding and backlog costs and show that this heuristic performs well in comparison to a previously proposed heuristic method in the literature called the equal-fractile heuristic.