LOT-SIZING IN ASSEMBLY SYSTEMS WITH RANDOM COMPONENT YIELDS

We investigate the problem of choosing optimal lot sizes in assembly s ystems when component manufacturing or procurement yields, and possibl y assembly yields, are random. For a single-period setting, we analyze two models. The first has components with identical yield distributio ns and costs, random demand and an imperfect assembly stage. We analyz e this two-stage problem, and highlight the implications of the result s for the single-stage case where the final product is just a set of g ood components. The second model is a single-stage system where compon ents have non-identical yield distributions and costs. We analyze a tw o-component system with known demand, identify conditions for concavit y, and derive the optimality conditions.