MANUFACTURING LEAD TIMES, SYSTEM UTILIZATION RATES AND LEAD-TIME-RELATED DEMAND

This paper presents a model to study manufacturing lead time planning problems for make-to-order manufacturing systems facing two types of c ustomer demand. One type of demand is manufacturing lead-time-sensitiv e, and higher prices prevail for short lead times; the other type of d emand is lead-time-insensitive. The objective is to maximize the expec ted profit. The form of the optimal policies in terms of manufacturing lead times and customer order-acceptance rates is characterized for t he general model developed. It is shown that the optimal policy has th e effect of both providing short manufacturing lead times and increasi ng system utilization rates, while the expected profit is maximized. T he specific optimal policies are developed for an application of the g eneral model to a make-to-order manufacturing system modeled as a queu eing system.