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Component part stocking policies
Author(s) -
Ernst Ricardo,
Pyke David F.
Publication year - 1992
Publication title -
naval research logistics (nrl)
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.665
H-Index - 68
eISSN - 1520-6750
pISSN - 0894-069X
DOI - 10.1002/1520-6750(199206)39:4<509::aid-nav3220390406>3.0.co;2-o
Subject(s) - mathematical optimization , computer science , constraint (computer aided design) , independent and identically distributed random variables , product (mathematics) , component (thermodynamics) , variable (mathematics) , service (business) , time horizon , variable cost , service level , random variable , operations research , mathematics , economics , microeconomics , statistics , physics , thermodynamics , mathematical analysis , geometry , economy
This article presents research designed to aid firms who assemble many components into a final product. We assume that purchase quantities are fixed, and that all parts and components are assembled at one stage in a short time. Demand for the final product is represented by a stationary independent and identically distributed random variable; and unmet demand is backordered. Ordering is done on a periodic review basis. We develop infinite horizon, approximate expected cost, and expected service level functions, and we present an algorithm for finding approximately minimum cost reorder points for each part subject to a service level constraint. Extensive results on the accuracy of the approximations are presented. Due to the size of the problem, we present only limited results on the performance of the optimization algorithm.