An operational decision model for lead-time and price quotation in congested manufacturing systems

This paper considers the problem of determining the lead-time and price to be quoted to a single order in a make-to-order manufacturing setting. The manufacturing system consists of several processing centers all subject to random failures and repairs. Because of a time window constraint on the delivery of the order, the latter has to be split among several processing centers to meet the constraint imposed on its delivery date. The assignment of lots to the processing centers is based on minimizing the operating cost associated with the entire order (i.e., its price). Two major cases are studied: the case of rushed order and the case of regular order. Each case has two options: Partial deliveries allowed and partial deliveries not allowed. Exact and heuristic algorithms are developed for each situation. Numerical results are used to draw conclusions and test the performance of the heuristics.