No-Holdback Allocation Rules for Continuous-Time Assemble-to-Order Systems

This paper analyzes a class of common-component allocation rules, termed no-holdback (NHB) rules, in continuous-review assemble-to-order (ATO) systems. We assume that component inventories are replenished following base-stock policies, subject to positive lead times. Different from the usually assumed FCFS component allocation rule, a NHB rule will not allocate a component to a product demand unless doing so will lead to immediate fulfillment of that demand. We identify metrics as well as cost and product structures under which NHB rules outperform all other component allocation rules. For systems with certain product structures, we obtain closed-form key performance expressions for NHB rules and compare them with those under FCFS. For general product structures, we present performance bounds and approximations. Finally, we discuss the applicability of these results to more general ATO systems.

• Type: Journal
• Year: 2010
• Where: IOR
• Authors: Yingdong Lu, Jing-Sheng Song, Yao Zhao
• Keywords: Allocation Rules, IOR 2010, Nhb Rules, Product Structures