Abstract: In an assembly system whose product is highly customized, in order to deliver the final product as soon as possible, the assembly plant usually release the component order to the supplier when the detailed demand of the customer was clear but the customer order is still unconfirmed (soft order).However, due to the uncertainty in soft orders, the supplier has to take the risk of production in advance.In case that the soft order is canceled ultimately, as the component is also highly customized, the component is difficult to be consumed by the other orders and turn to the inactive stock.Under this circumstance, we studies the optimal time to release the component order and the optimal decision of supplier.The decisionmaking procedure is given in this paper, and the expected profit of assembler and supplier is analyzed by considering the sharing ratio of production delay costs with a numerical example.

Key words: soft order, release order in advance, produce in advance