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Single‐Period Two‐Product Assemble‐to‐Order Systems with a Common Component and Uncertain Demand Patterns
Author(s) -
Xiao Yongbo,
Chen Jian,
Lee ChungYee
Publication year - 2010
Publication title -
production and operations management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 3.279
H-Index - 110
eISSN - 1937-5956
pISSN - 1059-1478
DOI - 10.1111/j.1937-5956.2009.01074.x
Subject(s) - order (exchange) , receipt , computer science , product (mathematics) , component (thermodynamics) , business , operations research , product type , operations management , economics , mathematics , finance , physics , geometry , world wide web , thermodynamics , programming language
We consider a single‐period assemble‐to‐order system that produces two types of end products to satisfy two independent and stochastic customer orders. Each type of product is used to fulfill a particular customer order and these two products share a common component. Furthermore, one customer may confirm her order before the other one, and the manufacturer needs to make a commitment immediately upon the receipt of each customer order on how many products to be delivered. We propose a model for optimizing the inventory and production decisions under the above ATO environment. We also extend our model to the situation where the manufacturer can fulfill the unsatisfied low‐priority demand using the left‐over inventories after fulfilling the high‐priority demand, in case the low‐priority customer arrives first. Numerical experiments are conducted, which provide some interesting insights on the impact of uncertain demand pattern.