Single Facility Due Date Setting with Multiple Customer Classes

Abstract

We consider the interrelated problems of (1) quoting a due date to each customer arriving to a production system modeled as a single-server queue and (2) sequencing customer orders once they are in the system. We allow several different classes of customers, each with different preferences for lead time and price. We first formulate the problem of quoting due dates under the assumption that customer orders are processed on a FCFS basis. Next, we consider the case where the firm has the option to schedule orders in other than FCFS order. For this case, we develop a heuristic for quoting due dates and sequencing orders. Simulation results suggest that policies that take into account customer price and due date preferences in scheduling and quoting due dates significantly outperform due date setting policies that do not.