Optimal base-stock policy of the assemble-to-order systems

In this work, an ordinal optimization-based evolution algorithm (OOEA) is proposed to solve a problem for a good enough target inventory level of the assemble-to-order (ATO) system. First, the ATO system is formulated as a combinatorial optimization problem with integer variables that possesses a huge solution space. Next, the genetic algorithm is used to select N excellent solutions from the solution space, where the fitness is evaluated with the radial basis function network. Finally, we proceed with the optimal computing budget allocation technique to search for a good enough solution. The proposed OOEA is applied to an ATO system comprising 10 items on 6 products. The solution quality is demonstrated by comparing with those obtained by two competing methods. The good enough target inventory level obtained by the OOEA is promising in the aspects of solution quality and computational efficiency.