Premium
Effect of increasing component commonality on service level and holding cost
Author(s) -
Bagchi Uttarayan,
Gutierrez Genaro
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(199210)39:6<815::aid-nav3220390607>3.0.co;2-s
Subject(s) - component (thermodynamics) , aggregate (composite) , stock (firearms) , service (business) , independent and identically distributed random variables , service level , product (mathematics) , exponential distribution , order (exchange) , computer science , econometrics , mathematics , mathematical optimization , business , statistics , marketing , random variable , engineering , mechanical engineering , materials science , physics , geometry , finance , composite material , thermodynamics
We investigate the effect of increasing component commonality in an assemble‐to‐order system. Numerical investigation of two end products that share up to three components, and whose demands are identically distributed according to either the exponential or the geometric distribution, shows that increasing component commonality results in increasing marginal returns when the criteria are aggregate service level and aggregate stock requirement. For arbitrary end‐product demands and general service measures, it is shown that the optimal holding cost for a given service level is concave in the level of commonality. © 1992 John Wiley & Sons, Inc.