Article ID: | iaor20081555 |
Country: | United Kingdom |
Volume: | 2 |
Issue: | 4 |
Start Page Number: | 452 |
End Page Number: | 480 |
Publication Date: | Jun 2007 |
Journal: | International Journal of Operational Research |
Authors: | Li Haitao, Womer Keith W. |
Keywords: | scheduling, heuristics: tabu search |
Accurate cost estimates for an incoming order are critical in formulating the optimal bidding strategy. When a firm is approaching its resource capacity, adding a new job into the system in the short-run may cause violations of the due date requirements, thus penalty costs arise. Failure to obtain an accurate estimate of the penalty costs often leads to sub-optimal bids. In this paper, we propose a two-stage model and procedure for optimal bidding under explicit resource constraints. The computational results indicate that our model and solution approach is both effective and efficient for the proposed problem.