Timing order fulfillment of capital goods under a constrained capacity

Qing Li, Q.-M. He, X. Wu

Research output: Journal article publicationJournal articleAcademic researchpeer-review

2 Citations (Scopus)

Abstract

© 2013, Springer Science+Business Media New York. This paper studies the order-fulfillment process of a supplier producing multiple customized capital goods. The times when orders are confirmed by customers are random. The supplier can only work on one product at any time due to capacity constraints. The supplier must determine the optimal time to start the process for each order so that the total expected cost of having the goods ready before or after their orders are confirmed is minimized. We formulate this problem as a discrete time Markov decision process. The optimal policy is complex in general. It has a threshold-type structure and can be fully characterized only for some special cases. Based on our formulation, we compute the optimal policy and quantify the value of jointly managing the order fulfillment processes of multiple orders and the value of taking into account demand arrival time uncertainty.
Original languageEnglish
Pages (from-to)431-456
Number of pages26
JournalAnnals of Operations Research
Volume241
Issue number1-2
DOIs
Publication statusPublished - 1 Jun 2016
Externally publishedYes

Keywords

  • Dynamic programming
  • Markov decision process
  • Multi-item production/inventory
  • Stopping time
  • Supply chain management

ASJC Scopus subject areas

  • Decision Sciences(all)
  • Management Science and Operations Research

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