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Title: Coordination of stocking decisions in an assemble-to-order environment
Authors: Zhang, X.
Ou, J. 
Gilbert, S.M.
Keywords: Assembly systems
Channel coordination
Supply chain management
Issue Date: 2008
Citation: Zhang, X., Ou, J., Gilbert, S.M. (2008). Coordination of stocking decisions in an assemble-to-order environment. European Journal of Operational Research 189 (2) : 540-558. ScholarBank@NUS Repository.
Abstract: This paper examines an assemble-to-order environment involving a short-life-cycle product that is sold in two different configurations, each requiring a unique component that must be stocked in advance. Both configurations of the product are assembled on the same equipment which has limited capacity. The focus of the analysis is on the determination of the appropriate stocking quantities for each of the configuration specific components. Because the same assembly capacity is often reused for different instances of the component stocking problem, we treat assembly capacity as exogenous. This represents the fact that capacity decisions are often made less frequently than are procurement/production quantity decisions. We first solve for the first-best stocking policy when the components are produced internally. We then consider the case when the components are procured from external suppliers, and investigate how different forms of contract between the assembler and the component suppliers affect coordination of the supply chain as well as each party's profit. One particularly interesting finding is that it is possible to coordinate the supply chain with a single-price contract between each supplier and the assembler while awarding all parties positive profit. © 2007 Elsevier B.V. All rights reserved.
Source Title: European Journal of Operational Research
ISSN: 03772217
DOI: 10.1016/j.ejor.2007.05.047
Appears in Collections:Staff Publications

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