USING ORDER ADMISSION CONTROL TO MAXIMIZE REVENUE UNDER CAPACITY UTILIZATION REQUIREMENTS IN MTO B2B INDUSTRIES

Andy Wu, David Chiang, Cheng-Wen Chang
2010 Journal of the Operations Research Society of Japan  
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
more » ... ved 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.
doi:10.15807/jorsj.53.270 fatcat:y7iynpy4djd2xjrslbr2rphswq