The modular assembly system can make it possible for the variety of products to be assembled in a short lead time. In this system, necessary components are assembled to optional components tailor to customers’ orders. Budget for inventory investments composed of inventory and purchasing costs are practically limited and the purchasing cost is often paid when an order is arrived. Service cost is assumed to be proportional to service level and it is included in budget constraint. We develop a heuristic procedure to find a good solution for a continuous review inventory system of the modular assembly system with a budget constraint. A regression analysis using a quadratic function based on the exponential function is applied to the cumulative density function of a normal distribution. With the regression result, an efficient heuristics is proposed by using an approximation for some complex functions that are composed of exponential functions only. A simple problem is introduced to illustrate the proposed heuristics.

1. Introduction
 2. Model Formulation
 3. Solution Methodology
 4. An Illustrative Example
 5. Conclusions
 Acknowledgement
 References

• Dongju Lee(Dept. of Industrial and Systems Engineering, Kongju National University) | 이동주
• Chang-Yong Lee(Dept. of Industrial and Systems Engineering, Kongju National University) | 이창용 Corresponding Author