Single‐Period Two‐Product Assemble‐to‐Order Systems with a Common Component and Uncertain Demand Patterns

We consider a single-period assemble-to-order system that produces two types of end products to satisfy two independent and stochastic customer orders. Each type of product is used to fulfill a particular customer order and these two products share a common component. Furthermore, one customer may confirm her order before the other one, and the manufacturer needs to make a commitment immediately upon the receipt of each customer order on how many products to be delivered. We propose a model for optimizing the inventory and production decisions under the above ATO environment. We also extend our model to the situation where the manufacturer can fulfill the unsatisfied low-priority demand using the left-over inventories after fulfilling the high-priority demand, in case the low-priority customer arrives first. Numerical experiments are conducted, which provide some interesting insights on the impact of uncertain demand pattern.