Revenue Management and Demand Fulfilment in Make-to-Stock Production
Speaker
Abstract
| Successful revenue management applications abound in the service industries, including the well-known examples of the airline, hotel, and car rental businesses. The situation in the manufacturing industry is quite different. This is due to the specific characteristics in manufacturing, as for example storage of excess capacity. Nevertheless, more and more practitioners as well as researchers have recently been exploring ways to adopt revenue management concepts to the specific needs of manufacturing. However, the relationships between different types of models is not clear. To overcome this confusion, a classification of scientific models in the area of demand fulfillment and revenue management will be shown in this talk. Furthermore, an example of how revenue management approaches can be used in the context of manufacturing is analyzed. For this, the following situation is considered: In a make-to-stock production system with exogenously given deterministic replenishments and several customer classes, the goal is to maximize profit over the planning horizon. This is done by deciding whether to accept or reject a given order in anticipation of more profitable future orders. What distinguishes this setup from classical revenue management approaches, as for example in airline ticket booking, is the explicit consideration of past and future replenishments and the integration of inventory holding and backlogging costs. If stock is on-hand, orders can be fulfilled immediately, backlogged or rejected. In shortage situations, orders can be either rejected or backlogged to be fulfilled from future arriving supply. The described decision problem can occur in many practical settings, as for example in make-to-stock production systems in which the production planning is done on a mid-term level (based on aggregated demand forecasts). Then – on the short-term – acceptance decisions about incoming orders are made according to stock on-hand and the planned production quantities. At the end of the talk, structural results of the proposed revenue management-based model will be discussed and further research opportunities are shown. |
| Contact information: |
| Naima Zerhane |
