The detailed coordination problem in a two-level assembly system with stochastic lead times

Abstract

In this paper, we study the detailed coordination problem in a two-level assembly system with stochastic lead times for lower-level items and constant and deterministic demand for the finished item. General formulae are developed for solving the optimal planned lead times with the objective to minimise total stockout and inventory holding costs. Consequently, we obtain the optimal safety lead time, which is the difference between planned and expected lead time. A solution procedure for the optimal planned lead times is discussed. Numerical examples are then given to illustrate the model. Moreover, the influence of the mean value and variance of actual lead times on the system performance and optimal control variables (such as the total cost of the system and planned lead times) is studied using our numerical results.