Component procurement and end product assembly in an uncertain supply and demand environment

In this paper, we examine a multi-product, multi-component, procurement and assembly problem with both supply and demand uncertainties. We explicitly model the uncertainty using a stochastic program that facilitates procurement and assembly decisions. We present a stochastic linear programming model...

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Bibliographic Details
Published in:International journal of production research Vol. 53; no. 3; pp. 969 - 982
Main Authors: Bollapragada, Ramesh, Kuppusamy, Saravanan, Rao, Uday S.
Format: Journal Article
Language:English
Published: London Taylor & Francis 01.02.2015
Taylor & Francis LLC
Subjects:
Assembly
Assembly lines
component procurement
Equivalence
Lead time
Linear programming
Manufacturers
Mathematical problems
Procurement
Purchasing
Stochastic models
stochastic programming
Stochasticity
Studies
Supply & demand
Supply and demand
supply and demand uncertainties
Uncertainty
ISSN:0020-7543, 1366-588X
Online Access:Get full text
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Summary:In this paper, we examine a multi-product, multi-component, procurement and assembly problem with both supply and demand uncertainties. We explicitly model the uncertainty using a stochastic program that facilitates procurement and assembly decisions. We present a stochastic linear programming model of the problem which we solve using its deterministic equivalent with a finite number of scenarios. We show that the systems performance, i.e. total cost, depends on the order lead time, L, and the assembly lead time Q, only through their sum . We illustrate the impact of on system performance with numerical experiments. Also, we illustrate that, in some cases, increasing supplier capacity can worsen system performance. In addition, we identify the key cost drivers that need attention from managers in the manufacturing industry, when there is limited knowledge of future demand and component availability.
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ISSN:0020-7543
1366-588X
DOI:10.1080/00207543.2014.951522