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Discrete-order admission ATP model with joint effect of margin and order size in a MTO environment

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  • Chiang, David Ming-Huang
  • Wu, Andy Wei-Di
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    Abstract

    Swarming demands and seasonality periodically induce a stringent capacity problem in the made-to-order (MTO) B2B environment. Desirable order admission is a tactic with minimal application cost for handling this problem. A real-time order admission problem with limited major-customer population and batch-size demand with heterogeneous distributions is modeled as a dynamic and stochastic knapsack problem. The optimality of the Markovian deterministic reward-threshold policy is verified. Optimal policy, basic policy, and the capacity rationing method are compared in the designed experiment. The numerical results suggest great potential for increasing profit using the optimal order admission policy for MTO businesses.

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    File URL: http://www.sciencedirect.com/science/article/pii/S0925527311002684
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    Bibliographic Info

    Article provided by Elsevier in its journal International Journal of Production Economics.

    Volume (Year): 133 (2011)
    Issue (Month): 2 (October)
    Pages: 761-775

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    Handle: RePEc:eee:proeco:v:133:y:2011:i:2:p:761-775

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    Web page: http://www.elsevier.com/locate/ijpe

    Related research

    Keywords: Revenue management Demand/capacity management Markovian decision process;

    References

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    1. Sridharan, Sri V., 1998. "Managing capacity in tightly constrained systems," International Journal of Production Economics, Elsevier, vol. 56(1), pages 601-610, September.
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    5. Arreola-Risa, Antonio, 1996. "Integrated multi-item production-inventory systems," European Journal of Operational Research, Elsevier, vol. 89(2), pages 326-340, March.
    6. Pibernik, Richard, 2005. "Advanced available-to-promise: Classification, selected methods and requirements for operations and inventory management," International Journal of Production Economics, Elsevier, vol. 93(1), pages 239-252, January.
    7. Kalyan Talluri & Garrett van Ryzin, 1998. "An Analysis of Bid-Price Controls for Network Revenue Management," Management Science, INFORMS, vol. 44(11-Part-1), pages 1577-1593, November.
    8. Jason D. Papastavrou & Srikanth Rajagopalan & Anton J. Kleywegt, 1996. "The Dynamic and Stochastic Knapsack Problem with Deadlines," Management Science, INFORMS, vol. 42(12), pages 1706-1718, December.
    9. Balakrishnan, Nagraj & Patterson, J. Wayne & Sridharan, V., 1999. "Robustness of capacity rationing policies," European Journal of Operational Research, Elsevier, vol. 115(2), pages 328-338, June.
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