Design a decision structure for the order promising process in hybrid MTS/MTO environments considering product substitution, a case study

The importance of order promising process has led manufacturers to use more productive production systems. Optimizing the production system is one of the ways to increase productivity. This issue becomes even more significant when some of the raw materials needed to produce different final products are homogenous. In this paper, a decision structure for the order promising process with product homogeneity and product substitution in a Hybrid Make-To-Stock and Make-To Order environment is studied. For this purpose, a bi-objective mathematical model has been designed and solved by the Lagrangian Relaxation solution method. Despite the extensive studies that have been done in this area, there are few articles that have studied the possibility of substituting the final products by the manufacturer. In order to investigate this gap, product substitution has been studied in this article. Two different types of customers are considered in this model. A case study is also conducted to evaluate the applicability of the proposed model. The results of this article show that the possibility of products substitution will reduce rejected orders and increase system profits. Also, fulfilling orders that are more flexible in terms of product delivery time is a higher priority for the manufacturer than other orders.