IDEAS home Printed from https://ideas.repec.org/a/spr/annopr/v241y2016i1d10.1007_s10479-013-1311-x.html
   My bibliography  Save this article

Timing order fulfillment of capital goods under a constrained capacity

Author

Listed:
  • Qing Li

    (Hong Kong University of Science and Technology)

  • Qi-Ming He

    (University of Waterloo)

  • Xiaoli Wu

    (South China University of Technology)

Abstract

This paper studies the order-fulfillment process of a supplier producing multiple customized capital goods. The times when orders are confirmed by customers are random. The supplier can only work on one product at any time due to capacity constraints. The supplier must determine the optimal time to start the process for each order so that the total expected cost of having the goods ready before or after their orders are confirmed is minimized. We formulate this problem as a discrete time Markov decision process. The optimal policy is complex in general. It has a threshold-type structure and can be fully characterized only for some special cases. Based on our formulation, we compute the optimal policy and quantify the value of jointly managing the order fulfillment processes of multiple orders and the value of taking into account demand arrival time uncertainty.

Suggested Citation

  • Qing Li & Qi-Ming He & Xiaoli Wu, 2016. "Timing order fulfillment of capital goods under a constrained capacity," Annals of Operations Research, Springer, vol. 241(1), pages 431-456, June.
    • Handle: RePEc:spr:annopr:v:241:y:2016:i:1:d:10.1007_s10479-013-1311-x
    DOI: 10.1007/s10479-013-1311-x
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s10479-013-1311-x
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s10479-013-1311-x?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    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. Saif Benjaafar & William L. Cooper & Joon-Seok Kim, 2005. "On the Benefits of Pooling in Production-Inventory Systems," Management Science, INFORMS, vol. 51(4), pages 548-565, April.
    3. Albert Y. Ha, 1997. "Optimal Dynamic Scheduling Policy for a Make-To-Stock Production System," Operations Research, INFORMS, vol. 45(1), pages 42-53, February.
    4. Izak Duenyas, 1995. "Single Facility Due Date Setting with Multiple Customer Classes," Management Science, INFORMS, vol. 41(4), pages 608-619, April.
    5. Morris A. Cohen & Teck H. Ho & Z. Justin Ren & Christian Terwiesch, 2003. "Measuring Imputed Cost in the Semiconductor Equipment Supply Chain," Management Science, INFORMS, vol. 49(12), pages 1653-1670, December.
    6. Lawrence M. Wein, 1991. "Due-Date Setting and Priority Sequencing in a Multiclass M/G/1 Queue," Management Science, INFORMS, vol. 37(7), pages 834-850, July.
    7. Albert Y. Ha, 2000. "Stock Rationing in an M/E k /1 Make-to-Stock Queue," Management Science, INFORMS, vol. 46(1), pages 77-87, January.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Feng, Jiejian & Zhang, Michael, 2017. "Dynamic quotation of leadtime and price for a Make-To-Order system with multiple customer classes and perfect information on customer preferences," European Journal of Operational Research, Elsevier, vol. 258(1), pages 334-342.
    2. Tanja Mlinar & Philippe Chevalier, 2016. "Pooling heterogeneous products for manufacturing environments," 4OR, Springer, vol. 14(2), pages 173-200, June.
    3. 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.
    4. Erica L. Plambeck, 2004. "Optimal Leadtime Differentiation via Diffusion Approximations," Operations Research, INFORMS, vol. 52(2), pages 213-228, April.
    5. Philipp Afèche & Opher Baron & Yoav Kerner, 2013. "Pricing Time-Sensitive Services Based on Realized Performance," Manufacturing & Service Operations Management, INFORMS, vol. 15(3), pages 492-506, July.
    6. Slotnick, Susan A. & Sobel, Matthew J., 2005. "Manufacturing lead-time rules: Customer retention versus tardiness costs," European Journal of Operational Research, Elsevier, vol. 163(3), pages 825-856, June.
    7. A. Baykal Hafızoğlu & Esma S. Gel & Pınar Keskinocak, 2016. "Price and Lead Time Quotation for Contract and Spot Customers," Operations Research, INFORMS, vol. 64(2), pages 406-415, April.
    8. Modarres, Mohammad & Sharifyazdi, Mehdi, 2009. "Revenue management approach to stochastic capacity allocation problem," European Journal of Operational Research, Elsevier, vol. 192(2), pages 442-459, January.
    9. Secil Savasaneril & Ece Sayin, 2017. "Dynamic lead time quotation under responsive inventory and multiple customer classes," OR Spectrum: Quantitative Approaches in Management, Springer;Gesellschaft für Operations Research e.V., vol. 39(1), pages 95-135, January.
    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.
    11. Philip Kaminsky & Onur Kaya, 2008. "Scheduling and due‐date quotation in a make‐to‐order supply chain," Naval Research Logistics (NRL), John Wiley & Sons, vol. 55(5), pages 444-458, August.
    12. Slotnick, Susan A., 2011. "Order acceptance and scheduling: A taxonomy and review," European Journal of Operational Research, Elsevier, vol. 212(1), pages 1-11, July.
    13. Öner-Közen, Miray & Minner, Stefan, 2017. "Impact of priority sequencing decisions on on-time probability and expected tardiness of orders in make-to-order production systems with external due-dates," European Journal of Operational Research, Elsevier, vol. 263(2), pages 524-539.
    14. Li, Xueping & Wang, Jiao & Sawhney, Rapinder, 2012. "Reinforcement learning for joint pricing, lead-time and scheduling decisions in make-to-order systems," European Journal of Operational Research, Elsevier, vol. 221(1), pages 99-109.
    15. Cemal AKTÜRK & Sevinç GÜLSEÇEN, 2018. "Sipariş Teslim Tarihi Problemi İçin Çok Kriterli ve Çok Yöntemli Karar Destek Sistemi Önerisi," Istanbul Management Journal, Istanbul University Business School, vol. 29(84), pages 65-78, June.
    16. Mark L. Spearman & Rachel Q. Zhang, 1999. "Optimal Lead Time Policies," Management Science, INFORMS, vol. 45(2), pages 290-295, February.
    17. Weixin Shang & Liming Liu, 2011. "Promised Delivery Time and Capacity Games in Time-Based Competition," Management Science, INFORMS, vol. 57(3), pages 599-610, March.
    18. Bertrand, J. W. M. & van Ooijen, H. P. G., 2000. "Customer order lead times for production based on lead time and tardiness costs," International Journal of Production Economics, Elsevier, vol. 64(1-3), pages 257-265, March.
    19. 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.
    20. Murat Erkoc & S. David Wu & Haresh Gurnani, 2008. "Delivery‐date and capacity management in a decentralized internal market," Naval Research Logistics (NRL), John Wiley & Sons, vol. 55(5), pages 390-405, August.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:annopr:v:241:y:2016:i:1:d:10.1007_s10479-013-1311-x. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.