No-Holdback Allocation Rules for Continuous-Time Assemble-to-Order Systems

Authors:
Yingdong Lu;Jing-Sheng Song;Yao Zhao
Affiliations:
IBM Research, Yorktown Heights, New York 10598;Fuqua School of Business, Duke University, Durham, North Carolina 27708, and Antai College of Economics and Management, Shanghai Jiao Tong University, Shanghai, 200052, China;Department of Supply Chain Management and Marketing Sciences, Rutgers University, Newark, New Jersey 07102
Venue:
Operations Research
Year:
2010

Citing 14
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Abstract

This paper analyzes a class of common-component allocation rules, termed no-holdback (NHB) rules, in continuous-review assemble-to-order (ATO) systems with positive lead times. The inventory of each component is replenished following an independent base-stock policy. In contrast to the usually assumed first-come-first-served (FCFS) component allocation rule in the literature, an NHB rule allocates a component to a product demand only if it will yield immediate fulfillment of that demand. We identify metrics as well as cost and product structures under which NHB rules outperform all other component allocation rules. For systems with certain product structures, we obtain key performance expressions and compare them to those under FCFS. For general product structures, we present performance bounds and approximations. Finally, we discuss the applicability of these results to more general ATO systems.