Integrating advance order information in make-to-stock production systems

Increased cooperation between supply chain partners and information technology are enabling the availability of advance order information for contract suppliers. Control mechanisms that take into account this availability are necessary in order to achieve the potential improvements in performance. We investigate the structure of optimal control policies for a discrete-time make-to-stock queue with advance order information. Since the optimal policy does not have a simple structure, we then propose a heuristic policy which is an extension of the base stock system that incorporates advance order information through a release lead time parameter. In order to quantify the benefits due to advance order information, we investigate the performance of the proposed mechanism and benchmark it against against the optimal control policy.