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Models For Integrated Customer Order Selection And Requirements Planning Under Limited Production Capacity

In: Supply Chain And Finance

Author

Listed:
  • K. Taaffe

    (Industrial and Systems Engineering Department, University of Florida, PO Box 116595, Gainesville, FL 32611, USA)

  • J. Geunes

    (Industrial and Systems Engineering Department, University of Florida, PO Box 116595, Gainesville, FL 32611, USA)

Abstract

Manufacturers regularly face the challenge of determining the best allocation of production resources to customer orders in make-to-order systems. Past research on dynamic requirements planning problems has led to models and solution methods that help production planners to effectively address this challenge. These models typically assume that the orders the production facility must meet are exogenously determined and serve as input parameters to the model. In contrast, we approach the problem by allowing the production planning model to implicitly decide which among all outstanding orders a production facility should satisfy in order to maximize the contribution to profit from production. The order selection models we provide generalize classical capacitated lot-sizing problems by integrating order-selection and production-planning decisions under limited production capacities. Building on prior analysis of an uncapacitated version of the problem, this chapter studies strong problem formulations and develops heuristic solution algorithms for several capacitated versions. Using a broad set of more than 3,000 randomly generated test problems, these heuristic solution methods provided solutions that were, on average, within 0.67% of the optimal solution value.

Suggested Citation

  • K. Taaffe & J. Geunes, 2004. "Models For Integrated Customer Order Selection And Requirements Planning Under Limited Production Capacity," World Scientific Book Chapters, in: Panos M Pardalos & Athanasios Migdalas & George Baourakis (ed.), Supply Chain And Finance, chapter 19, pages 315-346, World Scientific Publishing Co. Pte. Ltd..
  • Handle: RePEc:wsi:wschap:9789812562586_0019
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    Citations

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    Cited by:

    1. Taaffe, Kevin & Geunes, Joseph & Romeijn, H. Edwin, 2008. "Target market selection and marketing effort under uncertainty: The selective newsvendor," European Journal of Operational Research, Elsevier, vol. 189(3), pages 987-1003, September.
    2. Chahar, Kiran & Taaffe, Kevin, 2009. "Risk averse demand selection with all-or-nothing orders," Omega, Elsevier, vol. 37(5), pages 996-1006, October.
    3. Martin Steinrücke & Wolfgang Albrecht, 2016. "A flow-to-equity approach to coordinate supply chain network planning and financial planning with annual cash outflows to an institutional investor," Business Research, Springer;German Academic Association for Business Research, vol. 9(2), pages 297-333, August.
    4. Joseph Geunes & H. Edwin Romeijn & Kevin Taaffe, 2006. "Requirements Planning with Pricing and Order Selection Flexibility," Operations Research, INFORMS, vol. 54(2), pages 394-401, April.

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