TOWARDS A BETTER UNDERSTANDING ORDER ACCEPTANCE

This article concerns a comparison of two coordination mechanisms between production and sales activities. It focusses on the interaction of order acceptance and production scheduling at the operational level. The research is motivated by some major changes which have overcome the process industries during the past decade. In the first approach, the hierarchical approach whether or not to accept an order is based on aggregate characteristics of the set of already accepted orders. The production schedule is periodically updated for the orders accepted in the last period. In the second approach, order acceptance and production scheduling are integrated. The decision whether or not to accept the order is taken by determining a good production schedule which includes the new order.

In an experimental setting, which is based on the main characteristics of the process industries, both approaches are compared by means of a simulation model. The main conclusion is that for most situations there is relatively little difference between the two approaches. Only for tight situation (short lead times, high utilization rate) the integrated approach outperforms the hierarchial approach.