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Summary: A Complexity Model for Assembly Supply Chains in the Presence
of Product Variety and its Relationship to Cost
Hui Wang1
GĻoker Aydin2
S.Jack Hu1,3
1
Department of Industrial and Operations Engineering, University of Michigan, Ann Arbor
2
Kelley School of Business, Indiana University, Bloomington
3
Department of Mechanical Engineering, University of Michigan, Ann Arbor
Abstract
We propose a complexity measure for assembly supply chains, based on the concept of
information entropy. This complexity measure takes into account factors such as the supply
chain configuration, the level of variety offered by each node of the supply chain, and the
demand ratios across all the variants offered by a node. We investigate the relationship between
the complexity and the cost of an assembly supply chain. We first study the degree of consistency
between the cost and complexity criteria when comparing assembly supply chains with the same
configuration but different levels of product variety. We show that the cost and the complexity
are equivalent under certain conditions, in the sense that both of them rank a given set of
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