Article
Acceptance Ordering Scheduling Problem: The impact of an order-portfolio on a make-to-order firm’s profitability
Author/s | Perea Rojas-Marcos, Federico
Yepes-Borrero, Juan C. Menezes, Mozart B.C. |
Department | Universidad de Sevilla. Departamento de Matemática Aplicada II (ETSI) |
Publication Date | 2023-10 |
Deposit Date | 2023-09-05 |
Published in |
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Abstract | Firms’ growth, the darling measure of investors, comes from higher revenues. Thus, sales and marketing departments make extreme efforts to accept as many customer orders as possible. Unfortunately, not all orders contribute ... Firms’ growth, the darling measure of investors, comes from higher revenues. Thus, sales and marketing departments make extreme efforts to accept as many customer orders as possible. Unfortunately, not all orders contribute equally to profits, and some orders may even reduce net profits. Thus, saying no (i.e., not accepting an order) may be a necessary condition for net profits growth. For understanding the impact of rejecting orders on profitability, we propose an order acceptance and scheduling problem (OAS). Although the OAS has extensively been studied in the literature, there is still some gap between these papers and real-life problems in industry. In an attempt to close that gap, the OAS we propose considers orders revenues, machines costs, holding costs and tardiness costs. We develop a mixed integer linear programming (MILP) model for solving this problem. Since the complexity of the problem makes it impossible for the MILP to solver large-scale instances, we also propose a metaheuristic algorithm. Numerical experiments show that the metaheuristic finds good quality solutions in short computational times. In the last part of the paper we confirm some managerial insights: higher holding and tardiness costs imply a lower acceptance of orders, forcing production has a concave negative impact on net profits, and accurately estimating costs is essential for good planning. |
Funding agencies | Spanish Agencia Estatal de Investigación (AEI) and the European Regional Development’s fund (ERDF): PID2020-114594GB-C21 Regional Government of Andalusia: project FEDERUS-1256951 Regional Government of Andalusia: project AT21_00032 Spanish AEI with FEDER funds grant number PID2021-124975OBI00 |
Project ID. | PID2020-114594GB-C21
FEDERUS-1256951 AT21_00032 PID2021-124975OBI00 |
Citation | Perea Rojas-Marcos, F., Yepes-Borrero, J.C. y Menezes, M.B.C. (2023). Acceptance Ordering Scheduling Problem: The impact of an order-portfolio on a make-to-order firm’s profitability. International Journal of Production Economics, 264 (108977). https://doi.org/10.1016/j.ijpe.2023.108977. |
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