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A branch and price solution approach for order acceptance and capacity planning in make-to-order operations

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  • Mestry, Siddharth
  • Damodaran, Purushothaman
  • Chen, Chin-Sheng

Abstract

Make-to-order (MTO) operations have to effectively manage their capacity to make long-term sustainable profits. This objective can be met by selectively accepting available customer orders and simultaneously planning for capacity. We model a MTO operation of a job-shop with multiple resources having regular and non-regular capacity. The MTO firm has a set of customer orders at time zero with fixed due-dates. The process route, processing times, and sales price for each order are given. Since orders compete for limited resources, the firm can only accept some orders. In this paper a Mixed-Integer Linear Program (MILP) is proposed to aid an operational manager to decide which orders to accept and how to allocate resources such that the overall profit is maximized. A branch-and-price (B&P) algorithm is devised to solve the MILP effectively. The MILP is first decomposed into a master problem and several sub-problems using Dantzig-Wolfe decomposition. Each sub-problem is represented as a network flow problem and an exact procedure is proposed to solve the sub-problems efficiently. We also propose an approximate B&P scheme, Lagrangian bounds, and approximations to fathom nodes in the branch-and-bound tree. Computational analysis shows that the proposed B&P algorithm can solve large problem instances with relatively short time.

Suggested Citation

  • Mestry, Siddharth & Damodaran, Purushothaman & Chen, Chin-Sheng, 2011. "A branch and price solution approach for order acceptance and capacity planning in make-to-order operations," European Journal of Operational Research, Elsevier, vol. 211(3), pages 480-495, June.
    • Handle: RePEc:eee:ejores:v:211:y:2011:i:3:p:480-495
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    1. Xin Li & José A. Ventura & Kevin A. Bunn, 2021. "A joint order acceptance and scheduling problem with earliness and tardiness penalties considering overtime," Journal of Scheduling, Springer, vol. 24(1), pages 49-68, February.
    2. 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.
    3. Carvalho, Andréa Nunes & Oliveira, Fabricio & Scavarda, Luiz Felipe, 2016. "Tactical capacity planning in a real-world ETO industry case: A robust optimization approach," International Journal of Production Economics, Elsevier, vol. 180(C), pages 158-171.
    4. Akyildiz, Burcu & Kadaifci, Cigdem & Topcu, Ilker, 2015. "A decision framework proposal for customer order prioritization: A case study for a structural steel company," International Journal of Production Economics, Elsevier, vol. 169(C), pages 21-30.
    5. Somaye Geramipour & Ghasem Moslehi & Mohammad Reisi-Nafchi, 2017. "Maximizing the profit in customer’s order acceptance and scheduling problem with weighted tardiness penalty," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 68(1), pages 89-101, January.
    6. Range, Troels Martin & Kozlowski, Dawid & Petersen, Niels Chr., 2016. "Dynamic job assignment: A column generation approach with an application to surgery allocation," Discussion Papers on Economics 4/2016, University of Southern Denmark, Department of Economics.
    7. Carvalho, Andréa Nunes & Oliveira, Fabricio & Scavarda, Luiz Felipe, 2015. "Tactical capacity planning in a real-world ETO industry case: An action research," International Journal of Production Economics, Elsevier, vol. 167(C), pages 187-203.
    8. Amirhosein Gholami & Nasim Nezamoddini & Mohammad T. Khasawneh, 2023. "Customized orders management in connected make-to-order supply chains," Operations Management Research, Springer, vol. 16(3), pages 1428-1443, September.
    9. Range, Troels Martin & Kozlowski, Dawid & Petersen, Niels Chr., 2019. "Dynamic job assignment: A column generation approach with an application to surgery allocation," European Journal of Operational Research, Elsevier, vol. 272(1), pages 78-93.
    10. Talla Nobibon, Fabrice & Leus, Roel & Nip, Kameng & Wang, Zhenbo, 2015. "Resource loading with time windows," European Journal of Operational Research, Elsevier, vol. 244(2), pages 404-416.
    11. Tarhan, İstenç & Oğuz, Ceyda, 2022. "A matheuristic for the generalized order acceptance and scheduling problem," European Journal of Operational Research, Elsevier, vol. 299(1), pages 87-103.
    12. Zhang, Xiandong & (Yale) Gong, Yeming & Zhou, Shuyu & de Koster, René & van de Velde, Steef, 2016. "Increasing the revenue of self-storage warehouses by optimizing order scheduling," European Journal of Operational Research, Elsevier, vol. 252(1), pages 69-78.

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