On the use of independent base-stock policies in assemble-to-order inventory systems with nonidentical lead times

Martin I. Reiman, Haohua Wan, Qiong Wang

Research output: Contribution to journalArticlepeer-review

Abstract

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.

Original languageEnglish (US)
Pages (from-to)436-442
Number of pages7
JournalOperations Research Letters
Volume44
Issue number4
DOIs
StatePublished - Jul 1 2016

Keywords

  • Assemble-to-order
  • Base-stock policies
  • Nonidentical lead times
  • Stochastic program

ASJC Scopus subject areas

  • Software
  • Management Science and Operations Research
  • Industrial and Manufacturing Engineering
  • Applied Mathematics

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