Revenue Management Approach to Due Date Quoting and Scheduling in an Assemble-to-Order Production System

Posted: 18 Jan 2014 Last revised: 20 Jan 2016

See all articles by Hendrik Guhlich

Hendrik Guhlich

University of Mannheim

Moritz Fleischmann

University of Mannheim, Business School

Raik Stolletz

University of Mannheim

Date Written: May 8, 2015

Abstract

In this paper, we consider demand management decisions for an assemble-to-order production system in which both the availability of intermediate material and assembly capacity are limited. For each incoming order, the manufacturer must decide whether to accept it and what due date to quote for an accepted order. The actual assembly dates are still subject to change after these decisions, and a production schedule must be maintained to guarantee that the quoted due dates are met. Therefore, the decisions on accepting orders and quoting due dates must be made with incomplete knowledge of the actual resources used to fulfill the orders. To address these factors, we model this situation and develop a novel revenue management approach using bid prices. An extensive numerical study demonstrates the good performance of the proposed approach in comparison with benchmark algorithms and an ex-post optimal solution applied over a wide range of different supply and demand scenarios. Our results suggest that the consideration of assembly capacity constraints is more vital than the consideration of intermediate material constraints in our test cases.

Keywords: Revenue management, Demand fulfillment, Assemble-to-order, Assembly capacity, Scarce input materials

JEL Classification: M11, C61

Suggested Citation

Guhlich, Hendrik and Fleischmann, Moritz and Stolletz, Raik, Revenue Management Approach to Due Date Quoting and Scheduling in an Assemble-to-Order Production System (May 8, 2015). OR Spectrum 37 (4), 951-982, October 2015. Available at SSRN: https://ssrn.com/abstract=2378950 or http://dx.doi.org/10.2139/ssrn.2378950

Hendrik Guhlich (Contact Author)

University of Mannheim ( email )

Universitaetsbibliothek Mannheim
Zeitschriftenabteilung
Mannheim, 68131
Germany

Moritz Fleischmann

University of Mannheim, Business School ( email )

University of Mannheim
P.O. Box 10 34 62
Mannheim, 68131
Germany

Raik Stolletz

University of Mannheim ( email )

Schloss
Mannheim, 68131
Germany

Here is the Coronavirus
related research on SSRN

Paper statistics

Abstract Views
684
PlumX Metrics