AN OPTIMAL (Q,R) POLICY FOR A MULTIPART ASSEMBLY SYSTEM UNDER STOCHASTIC PART PROCUREMENT LEAD TIMES

We consider an EOQ-type model for a simple production system, where a number of parts are acquired to produce a single product and the part procurement lead times are random. Assembly is instantaneous and takes place intermittently in batches but cannot start until all the parts are available. The problem is to simultaneously determine when to orde r each part and what lot size to produce, namely to determine the reor der point for each part and the assembly lot size, so that the average total cost per unit time, composed of the setup cost, inventory holdi ng costs for the parts and the assembled product, and the shortage cos t for the assembled product, is minimized. We then develop a tailor-ma de solution method for this problem to obtain a global optimal solutio n by taking advantage of the structure of the problem formulation, whe re the nonlinear programming problem is decomposed into a family of su bproblems parametrized by the average assembly delay time. Numerical e xperiments are then conducted for the case of two-part problems, and s ome interesting observations are made. (C) 1997 Elsevier Science B.V.