Title

Optimal Structural Results for Assemble-to-Order Generalized M-Systems

Date of Original Version

5-2014

Type

Article

Abstract or Description

We consider an assemble-to-order generalized M-system with multiple components and multiple products, batch ordering of components, random lead times, and lost sales. We model the system as an infinite-horizon Markov decision process and seek an optimal policy that specifies when a batch of components should be produced (i.e., inventory replenishment) and whether an arriving demand for each product should be satisfied (i.e., inventory allocation). We characterize optimal inventory replenishment and allocation policies under a mild condition on component batch sizes via a new type of policy: lattice-dependent base stock and lattice-dependent rationing.

DOI

10.1287/opre.2014.1271

 

Published In

Operations Research, 62, 3, 571-579.