Skip to main content
SpringerLink
Log in

Leadtime, Inventory, and Service Level in Assemble-to-Order Systems

  • Chapter
Supply Chain Structures

Part of the book series: International Series in Operations Research & Management Science ((ISOR,volume 42))

  • 554 Accesses

Abstract

Supply chain design and management has recently gained unprecedented recognition as a vital factor in the success of a business. Among the most fundamental characteristics that determine the performance of a supply chain are capacity, inventory, delivery leadtime, and customer service level. The first two quantities are under direct management control and are associated with the cost in a supply chain; the last two are the effects of managerial decisions and are associated with customer expectation or requirement. While the qualitative relationship among them is often obvious, understanding their quantitative relationship is much more difficult yet increasingly important in today’s business environment. This chapter intends to introduce a set of tools and results to help better understand the quantitative relationship among these fundamental measures and make supply chain decisions more effectively.

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Log in via an institution
Chapter
USD 29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD 129.00
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
Softcover Book
USD 169.99
Price excludes VAT (USA)
  • Compact, lightweight edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info
Hardcover Book
USD 169.99
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Institutional subscriptions

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  1. Agrawal, N. and M.A. Cohen. (1999) Optimal Material Control in an Assembly System with Component Commonality. Working paper, Department of Operations and Information Management, The Wharton School, PA.

    Google Scholar 

  2. Asmussen, S. (1987) Applied Probability and Queues. Wiley, New York.

    Google Scholar 

  3. Aviv, Y. and A. Federgruen. (1997) Stochastic Inventory Models with Limited Production Capacities and Varying Parameters. Probability in the Engineering and Information Sciences, Vol. 11,107–135.

    Google Scholar 

  4. Bessler, S.A. and A.F. Veinott. (1965) Optimal Policy for a Dynamic Multiechelon Inventory Model, Naval Res. Logistics Quarterly, Vol. 13, 355–389.

    Google Scholar 

  5. Bookbinder, J.H. and J.-Y. Tan. (1988) Strategies for the Probabilistic Lot-Sizing Problem with Service-Level Constraints. Mgmt Sci., Vol. 34, 1096–1108.

    Article  Google Scholar 

  6. BoyaciT. and G. Gallego. (1998) Serial Production/ Transportation System under Service Constraints. Working Paper, Department of Industrial Engineering and Operations Research, Columbia University.

    Google Scholar 

  7. Buzacott, J.A. and J.G. Shanthikumar. (1994) Safety Stock versus Safety Time in MRP Controlled Production Systems. Mgmt. Sci., Vol. 40, 1678–1689.

    Article  Google Scholar 

  8. Cheng F., M. Ettl, G. Lin, and D.D. Yao. (2000) Inventory-Service Optimization in Configure-to-Order Systems: From Machine Type Models to Building Blocks. Technical Report, IBM T.J. Watson Research Center, Yorktown Hights, NY.

    Google Scholar 

  9. Chang, C.A. (1985) The Interchangeability of Safety Stocks and Safety Time. J. Oper. Mgmt., Vol. 6, 35–42.

    Google Scholar 

  10. Clark, A.J. AND H. Scarf. (1960) Optimal Policies for a Multi-Echelon Inventory. Mgmt. Sci., Vol. 6, 475–490.

    Google Scholar 

  11. Cohen, M.A., P. Kleindorfer, AND H. Lee. (1988) Service Constrained (s, S) Inventory Systems with Priority Demand Classes and Lost Sales. Mgmt. Sci., Vol. 34, 482–499.

    Google Scholar 

  12. Deuermeryer, B.L. AND L.B. Schwarz. (1981) A Model for the Analysis of System Service Level in Warehouse-Retailer Distribution Systems: The Identical Retailer Case, in Multi-Level Production/Inventory Control Systems: Theory and Practice, L. Swcharz, ed. North-Holland, Amsterdam, 163–193.

    Google Scholar 

  13. Eppen, G.D. AND L.E. Schrage. (1981) Centralized Ordering Policies in a Multiwarehouse System with Leadtimes and Random Demand, in Multi-Level Production/Inventory Control Systems: Theory and Practice, L. Swcharz, ed. North-Holland, Amsterdam, 51–69.

    Google Scholar 

  14. Ettl, M., G.E. Feigin, G.Y. Lin, AND D.D. Yao. (1995) A Supply-Chain Model with Base-Stock Control and Service Level Requirements. IBM Research Report, IBM T.J. Watson Research Center, Yorktown Heights, NY.

    Google Scholar 

  15. Federgruen, A. And P. Zipkin. (1984) Computational Issues in an Infinite-Horizon, Multiechelon Inventory Model. Oper. Res., Vol. 32, 818–836.

    Article  Google Scholar 

  16. Federgruen, A. And P. Zipkin. (1986a) An Inventory Model with Limited Production Capacity and Uncertain Demands, I: The Average Cost Criterion. Math. Oper. Res., Vol. 11, 193–207.

    Google Scholar 

  17. Federgruen, A. And P. Zipkin. (1986b) An Inventory Model with Limited Production Capacity and Uncertain Demands, II: The Discounted Cost Criterion. Math. Oper. Res., Vol. 11, 208–215.

    Google Scholar 

  18. Feller, W. (1971) An Introduction to Probability Theory and its Applications, Vol. 2, 2nd Edition. Wiley, New York.

    Google Scholar 

  19. Gallien J. And L.M. Wein. (1998) A Simple and Effective Component Procurement Policy for Stochastic Assembly Systems. Working paper, MIT Operations Research Center.

    Google Scholar 

  20. Glasserman, P. (1997) Bounds and Asymptotics for Planning Critical Safety Stocks. Oper. Res., Vol. 45, 244–257.

    Google Scholar 

  21. Glasserman, P. And T.-W. Liu. (1996) Rare-Event Simulation for Multistage Production-Inventory Systems. Mgmt. Sci., Vol. 42, 1292–1307.

    Article  Google Scholar 

  22. Glasserman, P. And S. Tayur. (1996) A Simple Approximation for a Multistage Capacitated Production-Inventory System. Naval Research Logistics, Vol. 43, 41–58.

    Google Scholar 

  23. Glasserman, P. And Y. Wang. (1998) Leadtime-Inventory Trade-Offs in Assemble-to-Order Systems. Oper. Res., Vol. 46, 858–871.

    Article  Google Scholar 

  24. Glasserman, P. And Y. Wang. (1999) Fill-Rate Bottlenecks in Production-Inventory Networks. Manufacturing and Service Operations Management, Vol. 1, 62–76.

    Google Scholar 

  25. Graves, S. (1985) A Multi-Echelon Inventory Model for a Repairable Item with One-for-One Replenishment. Mgmt. Sci., Vol. 31, 1247–1256.

    Google Scholar 

  26. Gut, A. (1988) Stopped Random Walks. Springer, New York.

    Book  Google Scholar 

  27. Kapucsinzki, R. And S. Tayur(1998) A Capacitated Production-Inventory Model with Periodic Demand. Oper. Res., Vol. 46, 899–911.

    Article  Google Scholar 

  28. Kendall, M. (1987) Advanced Theory of Statistics, Vol. II, 5th Edition. Oxford Pub., New York.

    Google Scholar 

  29. Lee, Y. And P.H. Zipkin. (1992) Tandem Queues with Planned Inventories. Oper. Res. Vol. 40, 936–947.

    Article  Google Scholar 

  30. Nahmias, S. (1997) Production and Operations Analysis,3rd Edition. Irwin.

    Google Scholar 

  31. Prabhu, N.U. (1980) Stochastic Storage Processes: Queues, Insurance Risk, and Dams. Springer, New York.

    Book  Google Scholar 

  32. Rosling, K. (1989) Optimal Inventory Policies for Assembly Systems Under Random Demands. Oper. Res., Vol. 37, 565–579.

    Google Scholar 

  33. Schneider, H. and J.L. Ringuest. (1990) Power Approximation for Computing (s, S) Policies Using Service Level. Mgmt. Sci., Vol. 36, 822–834.

    Article  Google Scholar 

  34. Schraner, E. (1996) Capacity/Inventory Trade-Offs in Assembleto-Order Systems. Working Paper, IBM T.J. Watson Research Center, Yorktown Heights, New York.

    Google Scholar 

  35. Siegmund, D. (1985) Sequential Analysis: Tests and Confidence Intervals. Springer, New York.

    Book  Google Scholar 

  36. Song, J.S. (1998) On the Order Fill Rate in a Multi-Item Inventory System. Oper. Res., Vol. 46, 831–845.

    Google Scholar 

  37. Song, J.S., S.H. Xu, and B. Liu. (1999) Order-Fulfillment Performance Measures in an Assemble-to-Order System with Stochastic Leadtime. Oper. Res., Vol. 47, 131–149.

    Google Scholar 

  38. Song, J.S. and D.D. Yao. (2000) Performance Analysis and Optimization of Assemble-to-Order Systems with Random Leadtimes. Oper. Res. to appear.

    Google Scholar 

  39. Tayur, S. (1993) Computing the Optimal Policy for Capacitated Inventory Models. Stochastic Models, Vol. 9, 585–598.

    Article  Google Scholar 

  40. Tigms, H.C. (1994) Stochastic Models: an Algorithmic Approach. Wiley, Chichester.

    Google Scholar 

  41. Tigms, H.C. and H. Groenevelt. (1984) Simple Approximations for the Reorder Point in Periodic and Continuous Review (s, S) Inventory Systems with Service Level Constraints, Euro. J. Oper. Res., Vol. 17, 175–190.

    Article  Google Scholar 

  42. Wang, Y. (2000) Near-Optimal Base-Stock Policies in Assembleto-Order Systems under Service Level Requirements. Working Paper, MIT Sloan School of Management, MA.

    Google Scholar 

  43. Zhang, A.X. (1997) Demand Fulfillment Rates in an Assembleto-Order System with Multiple Products and Dependent Demands, Prod. and Oper. Mgmt., Vol. 6, 309–324.

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Sloan School of Management, MIT, Room E53-353, Cambridge, MA, 02142, USA

    Yashan Wang

Authors
  1. Yashan Wang
    View author publications

    You can also search for this author in PubMed Google Scholar

Editor information

Editors and Affiliations

  1. University of California, Irvine, USA

    Jing-Sheng Song

  2. Columbia University, USA

    David D. Yao

Rights and permissions

Reprints and permissions

Copyright information

© 2002 Springer Science+Business Media New York

About this chapter

Cite this chapter

Wang, Y. (2002). Leadtime, Inventory, and Service Level in Assemble-to-Order Systems. In: Song, JS., Yao, D.D. (eds) Supply Chain Structures. International Series in Operations Research & Management Science, vol 42. Springer, Boston, MA. https://doi.org/10.1007/978-1-4757-6635-6_10

Download citation

  • DOI: https://doi.org/10.1007/978-1-4757-6635-6_10

  • Publisher Name: Springer, Boston, MA

  • Print ISBN: 978-1-4419-4917-2

  • Online ISBN: 978-1-4757-6635-6

  • eBook Packages: Springer Book Archive

Publish with us

Policies and ethics

Search

Navigation