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  • articleNo Access

    Component procurement under demand uncertainty for mainframe subassemblies

    This paper reports on a study of a methodology to procure semiconductor components for subassemblies used in mainframe computers assembled in IBM. The demand for the subassemblies is highly uncertain as a result of the uncertain mainframe model demands. The demands for mainframe models are dependent on each other. There is also dependency among demands in several time periods. The component personalization process is several weeks long and hence orders for components have to be placed in advance. There is a lot of commonality of components in subassemblies and subassemblies in mainframe models. A software tool to perform procurement planning as well as some what-if analyses has been developed. Results are reported on the use of this tool to generate component requirements by considering set requirements for components, component commonality and dependency of product demands. The results, when compared with the traditional materials requirements planning (MRP) method, suggest that equal or higher service levels can be achieved for a given inventory budget; conversely, a specified service level can be achieved with equal or lower component procurement.