Order selection and scheduling with leadtime flexibility

Abstract

In this paper, we study integrated order selection and scheduling decisions, where the manufacturer has the flexibility to choose leadtimes. Our main goal is to provide a mechanism for coordinating order selection, leadtime and scheduling decisions and to determine under what conditions leadtime flexibility is most useful for increasing the manufacturer's profits. Through numerical analyses, we compare and contrast the benefits of leadtime flexibility and the flexibility to partially fulfill orders in different demand environments defined by the congestion level (or demand load), seasonality of the demand and order size. We consider both the cases where the manufacturer has and does not have the flexibility to produce orders early before they are committed.

Acknowledgements

Pinar Keskinocak is supported by NSF CAREER award DMI-0093844. The authors are grateful to two anonymous reviewers for their helpful comments and would like to give special thanks to Professor S. Rajagopalan for his efforts during the revision of this paper.

Notes

¹For detailed numerical and statistical test results, please contact any of the authors.

² For detailed t-test results, please contact any of the authors.