A Note on Assemble-to-Order Systems with Batch Ordering

Management Science · 2000 · Volume 46 · Issue 5

DOI: 10.1287/mnsc.46.5.739.12043

Abstract

We study an assemble-to-order inventory system. The stocks are held for components, with final products assembled only when customer orders are realized. Customer orders form a multivariate compound Poisson process, component replenishment leadtimes are constant, and demands in excess of inventory on hand are backlogged. The component inventories are controlled by ( R, nQ ) policies. We show that under certain general conditions the inventory position vector has a uniform equilibrium distribution. This result generalizes the corresponding single-item theory considerably. It allows us to express the key performance measures of the system, such as order fill rates and average order-based backorders, as the averages of their counterparts in the base-stock systems.

Keywords

assemble-to-order systems, performance evaluation, multivariate compound poisson process, (R, nQ) policy, markov chain, uniform distribution

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