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Real-time order management with supplier capacity reservation

Author

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  • Elias T. Kirche
  • Rajesh Srivastava

Abstract

Collaboration between firms and their suppliers is growing in response to the need for integrating supply chains to minimise risk and increase profitability for both sides. In this study this issue is studied in the context of a build-to-order environment. Profitability of the firm impacted by order management decisions is examined in real time using a Profitable-To-Promise (PTP) model. It is shown that there is an optimal level of capacity to reserve with a preferred supplier in order to maximise profitability. The level of capacity to reserve in order to maximise customer service levels is also examined.

Suggested Citation

  • Elias T. Kirche & Rajesh Srivastava, 2010. "Real-time order management with supplier capacity reservation," International Journal of Manufacturing Technology and Management, Inderscience Enterprises Ltd, vol. 19(1/2), pages 124-139.
    • Handle: RePEc:ids:ijmtma:v:19:y:2010:i:1/2:p:124-139
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    Cited by:

    1. Inderfurth, Karl & Kelle, Peter & Kleber, Rainer, 2013. "Dual sourcing using capacity reservation and spot market: Optimal procurement policy and heuristic parameter determination," European Journal of Operational Research, Elsevier, vol. 225(2), pages 298-309.
    2. Karl Inderfurth & Peter Kelle & Rainer Kleber, 2011. "Dual Sourcing Using Capacity Reservation and Spot Market: Optimal Procurement Policy and Heuristic Parameter Determination," FEMM Working Papers 110014, Otto-von-Guericke University Magdeburg, Faculty of Economics and Management.

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