Production and Operations Management 1997
DEMAND FULFILLMENT RATES IN AN ASSEMBLETO‐ ORDER SYSTEM WITH MULTIPLE PRODUCTS AND DEPENDENT DEMANDS
Abstract
This paper presents a model for evaluating product fulfillment rates in an assemble‐to‐order system with a two‐level bill‐of‐material structure (products and components). Inventories are kept at the component level and are used to support service levels to product demands; each component is managed under a periodically reviewed, decentralized order‐up‐to policy. Product demands are correlated in a given period but are independent across periods. We develop the demand fulfillment rate for each product when demands are filled based on a first‐come‐first‐served discipline with limited priorities for different products within a period. We show that the fulfillment rate can be expressed as a multivariate normal probability when the product demands follow a multivariate normal distribution. We then use a numerical example to discuss computational issues and bounds associated with the evaluation of the demand fulfillment rates. Finally, we consider a model for minimizing the total inventory investment subject to given product demand fulfillment rates.
- DOI
- 10.1111/j.1937-5956.1997.tb00433.x
- Sources
- openalex