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Optimizing options fulfillment in a configure to order business

Through this project Compaq wanted to improve its knowledge of and to rationalize its supply chain for options fulfillment for its high-end servers. To obtain this goal, a database was constructed to provide the necessary demand profiles. Once this information was provided, many teams were able to eliminate waste and implement cost saving changes. One of these changes was to optimize the supply chain for options fulfillment. A supply chain optimization model and a decision support tool were developed to determine the best fulfillment model. These tools were used to generate a list of potential changes to the supply chain structures for the options. Compaq is a Houston, Texas based computer manufacturer. The New Products Introduction Group within High Performance Servers business located in Marlborough, Massachusetts coordinates life cycle activities for Alpha based high-end servers. Within this group Option Manufacturing System Program Managers are responsible for all options installed on the servers. The options can be factory installed, shipped with the system, or shipped separately for field installation. Over 600 options are currently available to be sold. Each of these options has an expected life cycle between I and 2 years. The demand for these options can vary from a few to 10,000 per year. The project was initiated to understand the demand profile of these options and to develop tools to optimize the supply chains for the fulfillment of these options. The tangible results of the project were the following: 1) development of the demand profiling database, 2) development of option supply chain optimization tool, 3) development of cost curves for each commodity class, and 4) recommendations for supply chain structures for each commodity class. The recommended changes have the potential to result in savings in excess of $700,000 per year. A full description of the optimization tool and a theoretical discussion of the demand profile, cost curves, and recommendations are included in the thesis. In addition to the tangible results, the tools have initiated some cultural changes by making data readily available. Thesis Advisor: Yashan Wang Thesis Advisor: Stanley Gershwin Title: Assistant Professor of Management Title: Senior Research Scientist