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©2006 informs production and inventory control of a single product assemble-to-order system with multiple customer classes.
| Content Provider | CiteSeerX |
|---|---|
| Author | Benjaafar, Saif Elhafsi, Mohsen |
| Abstract | We consider the optimal production and inventory control of an assemble-to-order system with m compo-nents, one end-product, and n customer classes. A control policy specifies when to produce each com-ponent and, whenever an order is placed, whether or not to satisfy it from on-hand inventory. We formulate the problem as a Markov decision process and characterize the structure of an optimal policy. We show that a base-stock production policy is optimal, but the base-stock level for each component is dynamic and depends on the inventory level of all other components (more specifically, it is nondecreasing). We show that the opti-mal inventory allocation for each component is a rationing policy with different rationing levels for different demand classes. The rationing levels for each component are dynamic and also nondecreasing in the inventory level of all other components. We compare the performance of the optimal policy to heuristic policies, including the commonly used base-stock policy with fixed base-stock levels, and find them to perform surprisingly well, especially for systems with lost sales. Key words: assemble-to-order (ATO) systems; production and inventory control; Markov decision processes; make-to-stock queues History: Accepted by Paul H. Zipkin, operations and supply chain management; received October 22, 2004. This paper was with the authors 7 months for 3 revisions. 1. |
| File Format | |
| Access Restriction | Open |
| Content Type | Text |
| Resource Type | Article |
