An available-to-promise stochastic model for order promising based on dynamic resource reservation policy

Abstract

Facing uncertain future customer orders, a pull-based available-to-promise (ATP) mechanism will deteriorate the overall profit since it allocates critical resources only to current customer orders. To prevent current less-profitable customer orders from over-consuming critical resources, this study investigates a push–pull based ATP problem with two time stages and three profit margin levels, and develops a dynamic resource reservation policy to maximise the expected total profit. Then, a corresponding push–pull based stochastic ATP model is established with known independent demand distributions, and the optimal reservation level is derived by the genetic algorithm to maximise the expected total profit. Finally, a series of simulation experiments are conducted to reveal the impact of some key factors, and the experiment results provide theoretical guidance and implementation methods for companies to maximise overall profits.