Optimal Admission Control and Sequencing in a Make-to-Stock/Make-to-Order Production System

Scott Carr () and Izak Duenyas ()
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Scott Carr: Anderson Graduate School of Management, University of California at Los Angeles, Los Angeles, California
Izak Duenyas: University of Michigan, School of Business, Ann Arbor, Michigan 48109

Operations Research, 2000, vol. 48, issue 5, 709-720

Abstract: In this paper, we address the problem of admission control and sequencing in a production system that produces two classes of products. The first class of products is made-to-stock, and the firm is contractually obliged to meet demand for this class of products. The second class of products is made-to-order, and the firm has the option to accept (admit) or reject a particular order. The problem is motivated by suppliers in many industries who sign contracts with large manufacturers to supply them with a given product and also can take on additional orders from other sources on a make-to-order basis.We model the joint admission control/sequencing decision in the context of a simple two-class M / M /1 queue to gain insight into the following problems: 1. How should a firm decide (a) when to accept or reject an additional order, and (b) which type of product to produce next? 2. How should a firm decide what annual quantity of orders to commit to when signing a contract to produce the make-to-stock products?

Keywords: Inventory/production: inventory policies for make-to-stock/make-to-order systems; Sequencing: stochastic sequencing (search for similar items in EconPapers)
Date: 2000
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Citations: View citations in EconPapers (26)

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