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Title: Component commonality in assembled-to-stock systems
Authors: Chew, E.K.P. 
Lee, L.H. 
Lau, Y.L.
Issue Date: Mar-2006
Citation: Chew, E.K.P., Lee, L.H., Lau, Y.L. (2006-03). Component commonality in assembled-to-stock systems. IIE Transactions (Institute of Industrial Engineers) 38 (3) : 239-251. ScholarBank@NUS Repository.
Abstract: This paper quantifies the impact of component sharing in a two-echelon assembled-to-stock system consisting of several common components and end-products. Whereas there is a benefit from risk pooling when component sharing is allowed, there is also a component-mismatch problem due to the demand uncertainty for end-products. We study these conflicting effects by comparing a particular component sharing policy, namely the equal-fractile allocation policy, with a make-to-stock system which does not allow the allocation of common components. The probabilistic analysis shows that when each type of component is shared by at least two end-products, the equal-fractile allocation policy will always help to reduce the safety stock required to be held at a sufficiently high service level. We also look at a special scenario of the equal-fractile allocation policy which takes into account inventory cost considerations. We show that this problem can be formulated as a newsvendor problem. Copyright © 2006 "IIE".
Source Title: IIE Transactions (Institute of Industrial Engineers)
ISSN: 0740817X
DOI: 10.1080/07408170500436724
Appears in Collections:Staff Publications

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