This paper quantifies the impact of component sharing in a two-echelon assembled-to-stock system consisting of several common components and end-products. Whereas there is a benefit from risk pooling when component sharing is allowed, there is also a component-mismatch problem due to the demand uncertainty for end-products. We study these conflicting effects by comparing a particular component sharing policy, namely the equal-fractile allocation policy, with a make-to-stock system which does not allow the allocation of common components. The probabilistic analysis shows that when each type of component is shared by at least two end-products, the equal-fractile allocation policy will always help to reduce the safety stock required to be held at a sufficiently high service level. We also look at a special scenario of the equal-fractile allocation policy which takes into account inventory cost considerations. We show that this problem can be formulated as a newsvendor problem.
Component commonality in assembled-to-stock systems
Reprints and Corporate Permissions
Please note: Selecting permissions does not provide access to the full text of the article, please see our help page How do I view content?
To request a reprint or corporate permissions for this article, please click on the relevant link below:
Academic Permissions
Please note: Selecting permissions does not provide access to the full text of the article, please see our help page How do I view content?
Obtain permissions instantly via Rightslink by clicking on the button below:
If you are unable to obtain permissions via Rightslink, please complete and submit this Permissions form. For more information, please visit our Permissions help page.
Related research
People also read lists articles that other readers of this article have read.
Recommended articles lists articles that we recommend and is powered by our AI driven recommendation engine.
Cited by lists all citing articles based on Crossref citations.
Articles with the Crossref icon will open in a new tab.