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Capacity Rationing Decision Procedures with Order Profit as a Continuous Random Variable by Yi-Feng Hung; Tzu-Yuan Lee is a Business, Management and Accounting article available to read on EtoBox.

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When expected demand is more than available capacity, a make-to-order manufacturer should take the more profitable orders and reject the less profitable orders in order to better allocate its limited capacity and maximize its profit. However, various orders will arrive at different times in the future, so the manufacturer cannot look at all the order inquiries at the same time and choose the most profitable ones. When an order inquiry arrives, the manufacturer must promptly determine, without knowing exactly what the future orders might be, whether to accept the order or to reject the order, thus reserving the capacity for future more profitable orders. This study focuses on such an order selection decision problem under the following assumptions: (1) the arrival of future customer orders is a Poisson process; (2) the capacity requirement of a future customer order is a continuous random variable; and (3) the profit per unit capacity used by an order is also a continuous random variable. Under the stochastic problem assumptions, this study investigates two decision procedures that determine whether to accept or to reject an order inquiry based on the available information, includin

Who reads Capacity Rationing Decision Procedures with Order Profit as a Continuous Random Variable?

Author

Yi-Feng Hung; Tzu-Yuan Lee

Publisher

Elsevier Science; Elsevier ; Elsevier BV (ISSN 0925-5273)

Published

2010

Language

EN

Field

Business, Management and Accounting (Social Sciences)