We consider the use of Independent Base Stock (IBS) replenishment policies in Assemble-to-Order (ATO) inventory systems. These policies are appealingly simple and widely used, but generally suboptimal for systems with non-identical lead times. We present an IBS policy and prove that its loss of optimality is limited by the ratio of the longest lead time to the shortest one. Our results suggest that IBS policies can work well for systems where differences between lead times are dominated by their lengths.
- Base-stock policies
- Nonidentical lead times
- Stochastic program
ASJC Scopus subject areas
- Management Science and Operations Research
- Industrial and Manufacturing Engineering
- Applied Mathematics