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The impact of component commonality on composite assembly policies
Author(s) -
Eynan Amit,
Rosenblatt Meir J.
Publication year - 2007
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/nav.20233
Subject(s) - pooling , component (thermodynamics) , profit (economics) , risk analysis (engineering) , computer science , industrial organization , operations research , newsvendor model , business , order (exchange) , build to order , operations management , process management , economics , microeconomics , supply chain , marketing , engineering , finance , production (economics) , artificial intelligence , physics , thermodynamics
Assemble in Advance (AIA) policy reduces assembly cost due to advance planning, while Assemble to Order (ATO) policy eliminates assembly of excessive (more than demanded) units. The tradeoffs between the two policies have been studied in the past for single product environments. Moreover, it was shown that it is beneficial to employ AIA and ATO simultaneously. In this article, we study the employment of such a composite assembly policy in a multiproduct environment with component commonality. When common components are used, ATO may also enable us to benefit from the risk pooling effect. We provide important managerial insights such as: the multiperiod problem is myopic and changes in inventory levels due to the use of common components, and demonstrate the potential profit increase compared to other policies.© 2007 Wiley Periodicals, Inc. Naval Research Logistics, 2007