Supply and Demand Synchronization in Assemble-to-Order Supply Chains

  • Markus Ettl
  • Karthik Sourirajan
  • Pu Huang
  • Thomas R. Ervolina
  • Grace Y. Lin
Chapter
Part of the International Series in Operations Research & Management Science book series (ISOR, volume 152)

Abstract

In this chapter, we describe a methodology for effectively synchronizing supply and demand through the integrated use of supply and demand flexibilities. While most prior literature focuses on the concept of Available-To-Promise (ATP) to determine product availability, we propose a new methodology called Available-To-Sell (ATS) that incorporates firm-driven product substitutions into capitalize on up-sell and alternative-sell opportunities in the production planning phase. ATS aims at finding marketable product alternatives that replace demand on supply-constrained products while minimizing expected stock-out costs for unfilled product demand and holding costs for leftover inventory. It enables a firm to maintain a financially viable and profitable product portfolio, taking effective actions to avoid excess component inventory, and articulating marketable product alternatives. We formulate a mathematical programming model to analyze the performance of ATS, and show how to exploit the structural properties of the model to develop an efficient solution procedure utilizing column generation techniques. The model can easily be embedded into a firm’s supply chain operations to improve day-to-day flexibility.

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Copyright information

© Springer New York 2011

Authors and Affiliations

  • Markus Ettl
    • 1
  • Karthik Sourirajan
  • Pu Huang
  • Thomas R. Ervolina
  • Grace Y. Lin
  1. 1.IBM Thomas J. Watson Research CenterYorktown HeightsUSA

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