Abstract

http://ssrn.com/abstract=1509307
 
 

References (25)



 


 



Optimal Control of an Assembly System with Demand for the End-Product and Intermediate Components


Oben Ceryan


Department of Decision Sciences, Lebow College of Business, Drexel University

Izak Duenyas


University of Michigan, Stephen M. Ross School of Business

Yoram Koren


University of Michigan at Ann Arbor - Department of Mechanical Engineering

September 19, 2010

Ross School of Business Paper

Abstract:     
We consider the production and admission control of a two-stage manufacturing system where intermediate components are produced to stock in the first stage and an end-product is assembled from these components through a second stage assembly operation which may allow backorders. The manufacturing firm faces two types of demand. The one directed at the end-product is satisfied immediately if there are available products in inventory, and the firm has the option to accept the order for later delivery or to reject the order if no inventory is available. The second type of demand is for any of the intermediate components and the firm again has the option to accept the order or reject it to keep the components available for assembly purposes. We provide structural results for the demand admission, component production and product assembly decisions. We also extend the model to take into account multiple customer classes based on revenue and a more general revenue collecting scheme where only an upfront partial payment for an item is received if a customer demand is accepted for future delivery with the remaining revenue received upon delivery. Since the optimal policy structure is rather complex and defined by switching surfaces in a multidimensional space, we also propose a simple heuristic policy for which the computational load grows linearly with the number of products and test its performance under a variety of example problems.

Number of Pages in PDF File: 37

Keywords: Admission Control, Revenue Management, Assembly Systems, Queueing Theory, Stochastic Optimization

JEL Classification: C61, M11

working papers series


Download This Paper

Date posted: December 26, 2010  

Suggested Citation

Ceryan, Oben and Duenyas, Izak and Koren, Yoram, Optimal Control of an Assembly System with Demand for the End-Product and Intermediate Components (September 19, 2010). Ross School of Business Paper . Available at SSRN: http://ssrn.com/abstract=1509307 or http://dx.doi.org/10.2139/ssrn.1509307

Contact Information

Oben Ceryan (Contact Author)
Department of Decision Sciences, Lebow College of Business, Drexel University ( email )
United States
Izak Duenyas
University of Michigan, Stephen M. Ross School of Business ( email )
701 Tappan Street
Ann Arbor, MI MI 48109
United States
Yoram Koren
University of Michigan at Ann Arbor - Department of Mechanical Engineering ( email )
Ann Arbor, MI 48109
United States
Feedback to SSRN


Paper statistics
Abstract Views: 452
Downloads: 62
Download Rank: 208,507
References:  25

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo6 in 0.265 seconds