A Study On Lead Time And Discount-based Inventory Model Of Component Commonality

In present market competition, time already became one of the most important factors, and customer's requirement for time is becoming more strict and sensitive. Reducing the lead time has become to be one of the most important strategies to get order and strengthen the competition for enterprises. Because of the variety and uncertainty of customer's demand and the market, shortage is unavoidable. When an item is out of stock, the supplier may offer a price discount on the stock out item to secure orders and compensate for the inconvenience of backordering. Then, the loyal, patient and captive customers will wait until the outstanding orders arrive and are served from them, but the others will not wait, and the orders will lose. The ratio of the customers who will wait is direct proportion with the price discount. In addition, with the development of technology and productivity, the complexity, reliability and lead time of a product are becoming more and more significant. In order to adapt this new requirement and change, many enterprises adopt component commonality strategies, which can reduce the lead time, decrease the inventory level and inventory cost, also can reduce the risk. So, the study on lead time and discount-based inventory model of component commonality has great significance.This thesis analyzes the lead time and discount-based inventory model of component commonality. Based on the lead time, component commonality and discount theory, this thesis starts with the basic inventory model of one product with normally distributed demand, which suppose the shortage is allowed and both lead time and backordering are negotiable, and the lead time crashing cost is represented as a function of reduced lead time and the quantities in the orders, when an item is out of stock, the supplier may offer a price discount. Then, a part of customers will wait, but the others will not wait, and the orders will lose. The optical order quantities, lead time, discount and backorder ratios are represented. Then, this paper extends the model to multi-product and component commonality, two models are proposed, one with non - component commonality, and the other one with component commonality. The models suppose the demand obey uniformity distribution, and the others are the same as above. The shortage of component commonality is especially analyzed because its complexity. At last, the analyses are given with the different between non - component commonality and component commonality conditions.