Integrated and hierarchical systems for coordinating order acceptance and release planning

Abstract

We present hierarchical models for coordinating order acceptance and release planning under load-dependent lead times. Our integrated models use detailed information at the item level, while the hierarchical models decompose the decision process into order acceptance and order release subproblems that are solved sequentially. Demand uncertainty is addressed by implementing the proposed models in a rolling horizon framework, and by including chance-constraints that include safety stock to address demand uncertainty. Simulation experiments show that the hierarchical models can capture almost all of the benefit of coordinated order acceptance and release and require less computational effort. The chance-constrained models that build safety stocks are effective in the face of uncertain order quantities.