Dynamic Price and Lead Time Quotation in a Make-to-Order System: Approximate Solutions

摘要

In this paper, we investigate the price and lead time decisions of a profit-maximizing firm providing a product or a service in a make-to-order manner. We assume that upon the arrival of a customer request, the firm quotes the price and the lead time and then the customer either accepts the quotation and places an order or rejects it and cancels the request. Furthermore, we assume that the number of unfulfilled orders at any time is limited due to resource constraints. We propose methodologies to find optimal and near optimal solutions for the dynamic quotation problem and test the performance of these methodologies through a numerical study.