SETTING SAFETY LEADTIMES FOR PURCHASED COMPONENTS IN ASSEMBLY SYSTEMS

We consider the problem of setting appropriate safety leadtimes in an assembly system where all components are purchased and the only manufacturing operation is final assembly. First, we describe two formulations of this problem: (1) minimize total inventory carrying and tardiness costs and (2) minimize inventory carrying costs subject to a service constraint. Second, we discuss how these formulations sometimes fail to adequately provide a decision maker with sufficient information to establish leadtimes when applied independently but how they can be used together to provide a useful decision support system. Finally, we describe a procedure similar to ABC analysis that allows us to solve a much smaller related problem whose solution provides a good approximation to the solution of the original problem. We conclude the paper with numerical examples and a discussion of an actual implementation.