Fulfillment of Rush Customer Orders under Limited Capacity

Abstract

Customer demand fulfillment is the business process within a company that determines how the customer demand is fulfilled. A rush order is the last minute customer order after the production plan of a company has been concluded. For these rush orders, appropriate and reasonable response is imperative as it could put strain on customer relationship and services. A good and positive response could help the company to build and retain its market share in today’s highly competitive markets. A model aims at decreasing the product inventory cost is proposed in this paper. In this model, the prioritized fulfillment sequence of rush customer demands can be searched in terms of the product inventory cost. The paper focuses on two main issues: the available-to-promise (ATP) based fulfillment ability and the prioritized fulfillment of customer demands. For ATP based fulfillment, a dynamic bill-of-material (BOM) is proposed to handle the complicated issues of BOM, BOM explosion and production capacity. By means of dynamic BOM, material availability as well as production capacity can be taken into consideration simultaneously and efficiently. Two methods, mathematical optimization and heuristic algorithm, are constructed and elaborated on in the second issue. The proposed model allows companies to prioritize customer rush orders in terms of product inventory cost.