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Optimal Lead Time Policies

Author

Listed:
  • Mark L. Spearman

    (School of Industrial and Systems Engineering, Georgia Institute of Technology, Atlanta, Georgia 30332)

  • Rachel Q. Zhang

    (Department of Industrial and Operations Engineering, University of Michigan, Ann Arbor, Michigan 48109)

Abstract

This paper examines two due-date setting problems first studied by Wein (1991). The first problem seeks to minimize the average due-date lead time (due-date minus arrival date) of jobs subject to a constraint on the fraction of tardy jobs (Problem I) while the second uses the same objective subject to a constraint on average job tardiness (Problem II). We show that under very general conditions, Problem I leads to unethical practice (i.e., quote lead times for which there is no hope to achieve when the system is highly congested) while Problem II results in policies that quote lead times that are monotonically increasing with the congestion level. Furthermore, we prove that Problem II is equivalent to a policy that is widely used and is easy to compute. This policy quotes lead times that guarantee the same serviceability level (the fraction of tardy jobs) to all jobs.

Suggested Citation

  • Mark L. Spearman & Rachel Q. Zhang, 1999. "Optimal Lead Time Policies," Management Science, INFORMS, vol. 45(2), pages 290-295, February.
  • Handle: RePEc:inm:ormnsc:v:45:y:1999:i:2:p:290-295
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    File URL: http://dx.doi.org/10.1287/mnsc.45.2.290
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    References listed on IDEAS

    as
    1. Izak Duenyas & Wallace J. Hopp, 1995. "Quoting Customer Lead Times," Management Science, INFORMS, vol. 41(1), pages 43-57, January.
    2. James K. Weeks, 1979. "A Simulation Study of Predictable Due-Dates," Management Science, INFORMS, vol. 25(4), pages 363-373, April.
    3. Lawrence M. Wein & Philippe B. Chevalier, 1992. "A Broader View of the Job-Shop Scheduling Problem," Management Science, INFORMS, vol. 38(7), pages 1018-1033, July.
    4. Izak Duenyas, 1995. "Single Facility Due Date Setting with Multiple Customer Classes," Management Science, INFORMS, vol. 41(4), pages 608-619, April.
    5. Shanthikumar, J. G. & Buzacott, J. A., 1984. "The time spent in a dynamic job shop," European Journal of Operational Research, Elsevier, vol. 17(2), pages 215-226, August.
    6. Kenneth R. Baker, 1984. "Sequencing Rules and Due-Date Assignments in a Job Shop," Management Science, INFORMS, vol. 30(9), pages 1093-1104, September.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Gökçe Kahveciog̃lu & Barış Balcıog̃lu, 2016. "Coping with production time variability via dynamic lead-time quotation," OR Spectrum: Quantitative Approaches in Management, Springer;Gesellschaft für Operations Research e.V., vol. 38(4), pages 877-898, October.
    2. Huang, Yeu-Shiang & Chen, Si-Hen & Ho, Jyh-Wen, 2013. "A study on pricing and delivery strategy for e-retailing systems," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 59(C), pages 71-84.
    3. Pengfei Guo & Paul Zipkin, 2007. "Analysis and Comparison of Queues with Different Levels of Delay Information," Management Science, INFORMS, vol. 53(6), pages 962-970, June.
    4. Altendorfer, Klaus & Minner, Stefan, 2015. "Influence of order acceptance policies on optimal capacity investment with stochastic customer required lead times," European Journal of Operational Research, Elsevier, vol. 243(2), pages 555-565.
    5. William S. Lovejoy & Ying Li, 2002. "Hospital Operating Room Capacity Expansion," Management Science, INFORMS, vol. 48(11), pages 1369-1387, November.
    6. Sridharan, V. & Li, Xiaoming, 2008. "Improving delivery reliability by a new due-date setting rule," European Journal of Operational Research, Elsevier, vol. 186(3), pages 1201-1211, May.
    7. Weng, Wei & Fujimura, Shigeru, 2012. "Control methods for dynamic time-based manufacturing under customized product lead times," European Journal of Operational Research, Elsevier, vol. 218(1), pages 86-96.
    8. Singer, Marcos & Donoso, Patricio, 2006. "Strategic decision-making at a steel manufacturer assisted by linear programming," Journal of Business Research, Elsevier, vol. 59(3), pages 387-390, March.
    9. Maglaras, Constantinos & Van Mieghem, Jan A., 2005. "Queueing systems with leadtime constraints: A fluid-model approach for admission and sequencing control," European Journal of Operational Research, Elsevier, vol. 167(1), pages 179-207, November.
    10. Charnsirisakskul, Kasarin & Griffin, Paul M. & Keskinocak, Pinar, 2006. "Pricing and scheduling decisions with leadtime flexibility," European Journal of Operational Research, Elsevier, vol. 171(1), pages 153-169, May.

    More about this item

    Keywords

    scheduling; leadtime; serviceability; tardiness;

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