COMPONENT COMMONALITY: MODELS WITH PRODUCT-SPECIFIC SERVICE CONSTRAINTS*

Common components are used extensively for reasons including product postponement and expediting new product development. We consider a two-stage assemble-to-order system with two products having uniformly distributed demand, one common component, and product-specific components. We develop optimization models in which the cost-minimizing inventory of the components must be determined and allocated to products in order to meet product-specific service level constraints. We compare two different commonality models based on whether or not the products are prioritized. A distinctive feature of our study is the use of product-specific service levels. We compare our results with models using aggregate service levels.