Production Schedule and Demand Management under Uniform Guaranteed Lead Time

Abstract

Time-to-market become one of the most important components of competitiveness. This paper studies the production schedule and demand management issues of a multiple operation production system under uniform guaranteed lead time. The system provides a service or a make-to-order product which is differentiated only in terms of prices and lead time. We classify the customers into two types: lead-time-sensitive (LTS) or price-sensitive (PS) according to their attitude towards lead time and prices. Each forms an independent market segment. Operating expenses are supposed to be step changed, which is different from most of the previous studies that assume cost function is linear increasing. Simulation method is employed to investigate the scheduling and demand management problems in this complicated system. An analytic model incorporating time sensitivity is presented. Through analyzing the simulation results, the insights in determining optimal operators and lot size are promoted. Then some demand management suggestions on the market segment selection are illustrated.