The Effect of Advance Demand Information on a Pull Production System with Two Customer Classes

Abstract

In many situations, different consumers have different degrees of willingness to wait to get delivery of a product. So, consumers can be segregated based upon the demand lead time they are providing. In this paper, two types of consumers have been considered. The first category needs immediate delivery of the product, so there is no demand lead time; whereas for the other category, demand lead time is positive. A manufacturer, which produces the items using a base stock policy, can benefit from the advance demand information that the second category of consumers are providing. Early fulfillment for a particular order means fulfilling the order before the demand lead time. In this research, it is shown that a restrictive early fulfillment policy can help the firm to reduce the chances of order loss. A production control approach for restrictive early fulfillment is discussed and the factors that may affect the early fulfillment policy are examined.