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Supplier Selection in Make-to-Order Manufacturing

In: Innovative Quick Response Programs in Logistics and Supply Chain Management

Author

Listed:
  • Jinfeng Yue

    (MTSU Box 75 Middle Tennessee State University)

  • Yu Xia
  • Thuhang Tran
  • Bintong Chen

Abstract

When make-to-order (MTO) manufacturers receive unpredictable custom orders, they face a common challenge: quick supplier selection of custom parts and components. This challenge becomes even more serious when the order’s customization level is high, the MTO’s committed delivery time is short, the desired service level is high, and the missing delivery time penalty is severe. This chapter considers an MTO manufacturer who produces a product consisting of several custom parts that cannot be pre-inventoried. To respond to the custom order quickly, the MTO manufacturer can follow the procedures in this chapter to allocate orders to each supplier for each custom part and calculate the associated replenishment cost as well as the probability of meeting the delivery date, using the suppliers’ jobs on hand, availability, process speed, and defective rate. For a given delivery time and service level, a replenishment cost frontier can be generated to provide a range of options to meet customer requirements. This innovative method can be further extended to the case when the delivery time is not fixed and the manufacturer needs to reduce its delivery time to win a customer bid.

Suggested Citation

  • Jinfeng Yue & Yu Xia & Thuhang Tran & Bintong Chen, 2010. "Supplier Selection in Make-to-Order Manufacturing," International Handbooks on Information Systems, in: T. C. Edwin Cheng & Tsan-Ming Choi (ed.), Innovative Quick Response Programs in Logistics and Supply Chain Management, pages 181-201, Springer.
    • Handle: RePEc:spr:ihichp:978-3-642-04313-0_9
    DOI: 10.1007/978-3-642-04313-0_9
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