A Study On The Control Policy And The Value Of Component Commonality Of W ATO System——based On Theoretical Modeling And Numerical Study

We consider the optimal production and inventory control of an assemble-to-order system with three components, two end-products, and single class demand for each end-product. We form the problem as a Markov decision process and study the structure of optimal cost function. Also we propose a heuristic algorithm which can be achieved easily in practice. And we compare it with the optimal policy. We also study the relationship between component commonality and system cost or the base stock level of components in our W model, which involves three components used to produce two products.(There are two unique parts and a common part. Each product uses the common part and its own unique part.). The existing results were built primarily on single-period models or periodic-review models with zero lead times. In this paper, we consider a continuous-review system with stochastic positive lead times. Through a series of numerical studies we found that properties exist in static model do not hold in our dynamic model.