The impact of component commonality on composite assembly policies |
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| Authors: | Amit Eynan Meir J Rosenblatt |
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| Institution: | 1. Robins School of Business, University of Richmond, Richmond, Virginia 23173Robins School of Business, University of Richmond, Richmond, Virginia 23173;2. John M. Olin School of Business, Washington University, St. Louis, Missouri 63130;3. Faculty of Industrial Engineering and Management, Technion ‐ Israel Institute of Technology, Haifa 32000, Israel |
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| Abstract: | 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 |
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| Keywords: | commonality assemble in advance assemble to order assembly risk‐pooling |
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