Managing production and lead time quotation with multiple demand classes

Sayın, Ece
In this study, we investigate several facets of a due-date quotation problem and develop a model considering jointly due-date quotation, order acceptance and base-stock decisions in a hybrid make-to-stock (MTS) / make-to-order (MTO) and multi-class system with lead time sensitive Poisson demand and exponentially distributed service times. We seek to maximize profit considering lateness penalties and holding costs in the model. We consider three alternative due-date quotation policies each having different properties in terms of due-date flexibility as well as the utilization of state information. In order to evaluate the value of due-date flexibility as well as state information, the performances of the optimal policy and alternative policies are evaluated for various performance measures under different operating conditions. We also discuss the benefit of joint pooling of inventory and capacity under optimal policy and an accept-all policy.