Statistics Seminar :: Optimal Control of High Volume Assemble To Order Systems

GUEST LECTURER
Dr. Amy Ward

AFFILIATION
Georgia Institute of Technology

ABSTRACT
We consider a high volume assemble-to-order system with mulitple products
and components. Our objective is to maximize infinite horizon expected
discounted profit. We show that optimal product prices and component
production capacity result in utilization near 100%, so the system is in
heavy traffic. We further show that heavy traffic remains the optimal
operating regime when customer orders must be assembled within a maximum
delay, and component production can be expedited at some additional cost.
In heavy traffic, the system exhibits a reduction in problem
dimensionaltiy. The limiting diffusion approximation has dimension equal
to the number of components (rather than the number of components plus the
number of products). We use this insight to propose discrete review
policies for sequencing product orders for assembly in both of the
aforementioned models. When delay constraints are present, we
additionally provide a policy for expediting components at discrete review
time points. We show our discrete review policies are asymptotically
optimal in heavy traffic.

DATE & TIME
Thursday, November 11, 2004 -- 12:00 PM

DURATION
1 hour

LOCATION
228 ISyE Main Building

CONTACT PERSON
roshan@isye.gatech.edu