An Available-to-Promise Model for Periodical Order Promising

To be competitive in an e-business era, it is critical to make not only responsive but also profitable order promises with an Available-to-Promise (ATP) system. While common practice like first-come-first-served (FCFS) basis will deteriorate overall profit especially under resource shortage situation. In this paper, a dynamic resource reservation policy for order-promising was proposed to prevent current less-profitable customer orders from over consuming the critical resource. Assuming known independent demand distributions, a corresponding stochastic model was developed. Finally, simulation experiments were conducted and showed that the benefit of enforcing the policy is correlated to initial availability.