American Institute of Mathematical Sciences

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July  2007, 3(3): 457-479. doi: 10.3934/jimo.2007.3.457

Revenue management via multi-product available to promise

Sandeep Dulluri 1, and  N. R. Srinivasa Raghavan 2,

1. 

JDA Software Group Inc., (formerly Manugistics Inc.,), New Product Development - Demand Planning, Hyderabad, INDIA - 500 081, India
2. 

Associate Professor, Decision Sciences Laboratory, Department of Management Studies, Bangalore, INDIA - 560 012, India

Received  March 2006 Revised  October 2006 Published  July 2007

Today's industries are highly complex in nature offering multiple customized 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 their customers as a retention strategy. In other words manufacturers are forced to commit in advance to the customers the amount they can deliver by the specified due-date. In the current work we address a single manufacturer and multi-customer supply chain setting wherein there are multiple products, stochastic demands, varying profit rates, different learning rates etc. We restrict our focus to the multi-product ATP (MATP) strategies that maximize net profit of the manufacturer. We present optimization models in which there is a possibility of cancelling prior committed orders. We also model the dynamic pricing decision integrated with revenue management in MATP setting. We present the results of weak concavity of the MATP models and related structural insights. We support our thesis with rigorous numerical experimental results.
Keywords: Weak Concavity, Cancellation., Revenue Maximization, Available-to-Promise.
Mathematics Subject Classification: Primary: 90C90, 90C27, 90B30 ; Secondary: 90C3.
Citation: Sandeep Dulluri, N. R. Srinivasa Raghavan. Revenue management via multi-product available to promise. Journal of Industrial & Management Optimization, 2007, 3 (3) : 457-479. doi: 10.3934/jimo.2007.3.457
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