Managing an Assemble-to-Order System
with Returns
Gregory A. DeCroix
(presenter), Jing-Sheng Song, and Paul Zipkin
Fuqua
We
consider a multi-product assemble-to-order system, in which we keep inventory
only at the component level and the finished products are assembled only in
response to customer demands. In addition to the usual means of replenishing
component inventories – placing orders with an outside source – the system also
receives stochastic returns of finished products, from which subsets of the
components can be recovered and returned to inventory. We explore methods of
computing performance metrics for such a system, and study the impact of these
product returns on inventory-service tradeoffs.