Simultaneous and sequential price quotations for uncertain order inquiries with production scheduling cost.

Zhixin Liu, Liang Lu, Xiangtong Qi

    Research output: Contribution to journalArticle

    4 Citations (Scopus)

    Abstract

    This article studies the coordination between pricing and production scheduling decisions of a manufacturer who quotes prices for a set of order inquiries. Each inquiry is either canceled or confirmed by its owner following a certain probability distribution that depends on the quoted price. The manufacturer then incurs a production scheduling cost for processing each firm order. Two types of price quotation schemes, simultaneous and sequential quotations, are investigated. A simultaneous quotation quotes all order inquiries simultaneously. The problem is formulated with a specific form of price function as a quadratic program that can be solved efficiently. Properties of optimal quotations are provided. A sequential quotation quotes order inquiries one at a time. For the problem, optimal algorithms are developed using implicit enumeration and design-efficient heuristics. Simultaneous and sequential quotations and several managerial insights are obtained in computational studies. The
    Original languageEnglish
    Pages (from-to)820 - 833
    JournalIIE Transactions
    Volume44
    Issue number10
    DOIs
    Publication statusPublished - 2012

    Keywords

    • PRICE quotations
    • PRODUCTION scheduling, INDUSTRIAL costs, DECISION making, DISTRIBUTION (Economic theory), ECONOMIC efficiency, BUSINESS development, coordination, production scheduling

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