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

Ramesh Bollapragada, Saravanan Kuppusamy, Uday S. Rao

Research output: Contribution to journalArticlepeer-review

13 Scopus citations

Abstract

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 L + Q. We illustrate the impact of L + Q 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.

Original languageEnglish (US)
Pages (from-to)969-982
Number of pages14
JournalInternational Journal of Production Research
Volume53
Issue number3
DOIs
StatePublished - Feb 1 2015
Externally publishedYes

All Science Journal Classification (ASJC) codes

  • Strategy and Management
  • Management Science and Operations Research
  • Industrial and Manufacturing Engineering

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