Using order admission control to maximize revenue under capacity utilization requirements in MTO B2B industries
Journal
Journal of the Operations Research Society of Japan
Journal Volume
53
Journal Issue
4
Pages
270-288
Date Issued
2010
Author(s)
Abstract
An order admission model is developed to introduce revenue management into MTO B2B industries. This solution is designed to resolve a common order management dilemma faced by manufacturers with severe seasonal demands. Considering the requirement that manufacturing industries be risk averse, the objective is to maximize the expected total revenue under a targeted capacity utilization constraint. The deterministic admission problem and its auxiliary model are presented and solved through an iterative dynamic programming algorithm. Through this algorithm, a reward-threshold order admission policy can be established at the beginning of the planning horizon, helping companies to achieve a balance between profitability and stability.
SDGs
Type
journal article