A Multi-Level Framework for Demand Fulfillment in a Make-to-Stock Environment-A Case Study in Canadian Softwood Lumber Industry

This paper proposes a demand fulfillment process for Make-To-Stock environments, integrating sales and operations planning (S&OP) and order promising, for a commodity market characterized by prices and demand seasonality. Considering differentiated customers, different products and multiple sourcing locations in a multiperiod context, we define a multi-level decision framework in order to support short and medium term sales decisions in a way to maximize profits and to enhance the service level offered to high-priority customers. Our research exhibits three valuable elements: (1) we developed an order promising model based on nested booking limits and which allows order reassignment i.e. changing decisions of how firm orders have to be fulfilled; (2) we used a rolling horizon simulation to evaluate performance of the demand fulfillment process proposed; and (3) we compare it with common fulfillment processes such firstcome first-served order processing. In order to evaluate the demand fulfillment process proposed, a numerical application based on softwood lumber manufacturers located in Eastern Canada is conducted and provides evidence that better performances (overall service level, high-priority service level and overall net profit) can be achieved by using nested booking limits and reviewing previous order promising decisions whilst respecting sales commitments.