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Managing an assemble-to-order system with returns

Publication ,  Journal Article
Decroix, GA; Song, JS; Zipkin, PH
Published in: Manufacturing and Service Operations Management
January 1, 2009

We consider a multiproduct assemble-to-order (ATO) system, in which inventory is kept only at the component level and the finished products are assembled in response to customer demands. In addition to stochastic demand for finished products, the system experiences stochastic returns of subsets of components, which can then be used to satisfy subsequent demands. The system is managed over an infinite horizon using a component-level base-stock policy. We identify several ways in which returns complicate the behavior of the system, and we demonstrate how to handle these additional complexities when calculating or approximating key order-based performance metrics, including the immediate fill rate, the fill rate within a time window, and average backorders. We also present a method for computing a near-optimal base-stock policy. We use these results to address managerial questions on both operational and product-design levels. For example, we find that tracking product-based (as opposed to component-based) return information appears to provide much less value than tracking product-based demand information, and we explore the impact of the number of products, component lead times, and different patterns of component returns (joint versus independent returns, returns of common versus dedicated components) on the value of component commonality. © 2009 INFORMS.

Duke Scholars

Published In

Manufacturing and Service Operations Management

DOI

EISSN

1526-5498

ISSN

1523-4614

Publication Date

January 1, 2009

Volume

11

Issue

1

Start / End Page

144 / 159

Related Subject Headings

  • Operations Research
  • 4901 Applied mathematics
  • 3509 Transportation, logistics and supply chains
  • 1505 Marketing
  • 1503 Business and Management
  • 0102 Applied Mathematics
 

Citation

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ICMJE
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Decroix, G. A., Song, J. S., & Zipkin, P. H. (2009). Managing an assemble-to-order system with returns. Manufacturing and Service Operations Management, 11(1), 144–159. https://doi.org/10.1287/msom.1070.0209
Decroix, G. A., J. S. Song, and P. H. Zipkin. “Managing an assemble-to-order system with returns.” Manufacturing and Service Operations Management 11, no. 1 (January 1, 2009): 144–59. https://doi.org/10.1287/msom.1070.0209.
Decroix GA, Song JS, Zipkin PH. Managing an assemble-to-order system with returns. Manufacturing and Service Operations Management. 2009 Jan 1;11(1):144–59.
Decroix, G. A., et al. “Managing an assemble-to-order system with returns.” Manufacturing and Service Operations Management, vol. 11, no. 1, Jan. 2009, pp. 144–59. Scopus, doi:10.1287/msom.1070.0209.
Decroix GA, Song JS, Zipkin PH. Managing an assemble-to-order system with returns. Manufacturing and Service Operations Management. 2009 Jan 1;11(1):144–159.

Published In

Manufacturing and Service Operations Management

DOI

EISSN

1526-5498

ISSN

1523-4614

Publication Date

January 1, 2009

Volume

11

Issue

1

Start / End Page

144 / 159

Related Subject Headings

  • Operations Research
  • 4901 Applied mathematics
  • 3509 Transportation, logistics and supply chains
  • 1505 Marketing
  • 1503 Business and Management
  • 0102 Applied Mathematics