Department of Management Information Systems
National Pingtung University of Science and Technology
Pingtung, Taiwan 91207 R.O.C.
Customers may inquiry several make-to-order (MTO) firms participating in the bidding competition and then decide which bid to accept. The inquiry orders from customers are contingent orders for MTO firms. In MTO firms, pricing, due-date setting and scheduling are three major decisions for the bids regarding the contingent orders. Since they affect one another, how to determine price, due date and schedule simultaneously becomes an important issue. In the past, price and due date are determined together based on the maximal expected marginal revenue criterion under the fixed capacity constraint and some dispatching rules such as early due date (EDD), first-come-first-serve (FCFS), etc., are used for scheduling. In this paper, a bidding model for the simultaneous pricing, due-date setting and scheduling problem (SPDSP) regarding the contingent orders in MTO firms is proposed based on the maximal expected marginal revenue criterion. Since searching for the optimal solution in this model is an NP (non-polynomial) problem, a hybrid heuristic method, which overcomes the search ineffectiveness problem of pure global search heuristic methods, is proposed to solve this problem. The results show our proposed method is better than the existing methods and pure global search heuristic methods in terms of average total marginal revenue per order.
Keywords:simultaneous pricing, due-date setting, and scheduling problem (SPDSP); make-to-order (MTO) firms, contingent orders; bidding mode, hybrid heuristic method
(*Contact: E-mail sliu@mail.npust.edu.tw )
Cite this article as: Shu-Chu Liu and Chun-Hui Liu, "SIMULTANEOUS PRICING, DUE-DATE SETTING AND SCHEDULING FOR MAKE-TO-ORDER FIRMS WITH CONTINGENT ORDERS," Journal of the Chinese Institute of Industrial Engineers, 26, 32-43 (2009).