Revenue management via multi-product available to promise

Abstract

Today's industries are highly complex in nature offering multiplecustomized quality products with shorter product life-cycles,volatile demand and tighter due-dates etc. to the customers.Manufacturers are focussing on Available-To-Promise (ATP) to theircustomers as a retention strategy. In other words manufacturers areforced to commit in advance to the customers the amount they candeliver by the specified due-date. In the current work we address asingle manufacturer and multi-customer supply chain setting whereinthere are multiple products, stochastic demands, varying profitrates, different learning rates etc. We restrict our focus to themulti-product ATP (MATP) strategies that maximize net profit of themanufacturer. We present optimization models in which there is apossibility of cancelling prior committed orders. We also model the dynamic pricing decision integrated with revenue management in MATP setting. Wepresent the results of weak concavity of the MATP models and related structuralinsights. We support our thesis with rigorous numerical experimental results.