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

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