Revenue management in make-to-order manufacturing—an application to the iron and steel industry

Order promising in make-to-order manufacturing often has a strong focus on resource oriented factors. Economic aspects are, if at all, only implicitly taken into account. In this paper we develop a revenue management approach to improve order promising for short-term sales in the iron and steel industry as an example of make-to-order manufacturing. We formulate a multi-dimensional knapsack problem to cope with the uniqueness of orders and the corresponding capacity demand. To provide decision support in accepting/rejecting orders, we implement two bid-price calculation schemes. Competitive computational analysis based on real world production data shows the potential benefit of our approach.

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