Customer-order information, leadtimes, and inventories
Management Science
Leadtime-Inventory Trade-Offs in Assemble-To-Order Systems
Operations Research
Contract Assembly: Dealing with Combined Supply Lead Time and Demand Quantity Uncertainty
Manufacturing & Service Operations Management
Newsvendor Bounds and Heuristic for Optimal Policies in Serial Supply Chains
Management Science
Manufacturing & Service Operations Management
Coordinating a two-supplier and one-retailer supply chain with forecast updating
Automatica (Journal of IFAC)
A Lagrangian based solution algorithm for a build-to-order supply chain network design problem
Advances in Engineering Software
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This paper considers an inventory and production-planning problem for a contract manufacturer who anticipates an order of a single product, but with uncertain quantity. To meet the challenges of long component procurement lead times and limited assembly capacity, which may render production time insufficient to assemble total order quantity, the manufacturer may need to procure components or even assemble some quantities of the final product before receiving the confirmation of the actual order quantity. We present profit-maximization models that make optimal inventory and production decisions in the above assemble-to-order environment. We also consider the option of outsourcing, so that the manufacturer can outsource part of his production to an external facility that also has limited capacity. We establish structural properties of optimal solutions and develop efficient solution procedures for the proposed problems. We also provide sensitivity analysis of the optimal decisions, and some managerial insights.