In a global market with increasing product variety, one approach that manufacturers can use to control inventory costs is to properly explore the opportunities in the design of component commonality. The use of common parts can also greatly facilitate new product and production process design and therefore provide the company with a competitive advantage. To fully realize the potential benefits from commonality, one needs a clear understanding of its impacts. This thesis aims at studying the effects of component commonality analytically and providing guidelines and tools for the design and implementation of a commonality system in a complex manufacturing environment....[ Read more ]

In a global market with increasing product variety, one approach that manufacturers can use to control inventory costs is to properly explore the opportunities in the design of component commonality. The use of common parts can also greatly facilitate new product and production process design and therefore provide the company with a competitive advantage. To fully realize the potential benefits from commonality, one needs a clear understanding of its impacts. This thesis aims at studying the effects of component commonality analytically and providing guidelines and tools for the design and implementation of a commonality system in a complex manufacturing environment.

We investigate the benefits of component commonality on inventory costs and service levels in a multi-stage assembly system. The assembly system model is based on the manufacturing system that we observed in a field study in an electronics equipment manufacturing firm. Based on the performance when a commonality strategy is implemented we want to answer the following important question: at which stage along an assembly line should common components be applied if choices are available?

We formulate and analyze two basic models, namely, a base model and a commonality model. The models are characterized by two end products, multiple components, and multiple stages, with stochastic demands and a periodic review order-up-to base stock policy in a multi-period setting. The challenge involved is to solve a total inventory cost minimization problem with an aggregate service level constraint. We propose a scheme for determining the base stock levels of each stockpile based on an independent production rule. The assembly systems investigated can be further divided into two sub-systems, namely, upstream and downstream sub-systems. The manufacturing strategy, i.e., Assemble-to-Order, is to make partially completed products to stocks via the upstream sub-system and to assemble the final products to orders via the downstream sub-system. For a tightly- coupled type of upstream production environment, closed-form results for the basestock levels of upstream stockpiles are obtained and approximations for the relevant inventory costs are also proposed for the base model and the commonality model, respectively. Based on these results, we can then explore the effects of introducing commonality at different stages analytically. The most significant observation is that the impacts of applying commonality strategy at different stages are different.

By assuming a tightly-coupled upstream sub-system, the downstream sub-system can be modeled as a single-stage assembly station. In this context, this thesis studies the relationship between local service levels of each component and end-customer service levels achieved in such a single-stage model, taking into consideration the difference in replenishment lead-times between components. In addition, the effects of component commonality in a single-stage assembly system are also investigated through a simulation-based experimental study.

This thesis also explores the issue of product differentiation postponement in the context of applying component standardization continuously along the upstream assembly line. Our objective here is to determine the optimal point of product differentiation.

Finally, the general system behaviors of the base model and the commonality model are investigated through simulation, and several interesting results on effects of commonality, allocation policies and optimal solutions are obtained. We then summarize qualitative insights and managerial implications into the component commonality design and implementation, and inventory management in a general multi-stage assembly system.