Design of a sales plan in a hybrid contractual and non-contractual context in a setting of limited capacity: A robust approach

• Type: Article in International Scientific Journal
• Date: 2023

Authors

Pereira, DF (Author) Other; José Fernando Oliveira (Author) FEUP; Maria Antónia Carravilla (Author) FEUP

Journal

Title: International Journal of Production Economics

Vol. 260

ISSN: 0925-5273

Publisher: Elsevier

Indexing

ISI Web of Knowledge - 0 Citations

Scopus - 0 Citations

Other information

Authenticus ID: P-00Y-5RT

DOI: 10.1016/j.ijpe.2023.108867

Abstract (EN): Many companies face capacity limitations that impair them to satisfy potential demand. In this context, sales/marketing teams have to decide which demand segments the company should prioritize. In business -to-business contexts, it is common that this selection includes customers with and without a contract. On the operations side, the production teams are interested in finding the most efficient usage for the available capacity. However, decision-making approaches to face such a challenge are scarce. In this paper, we propose a scenario-based robust optimization model to support the sales and marketing teams to define the most profitable sales plan in a setting of limited capacity, to serve multiple customers that can be either non -contractual or operate under quantity-flexibility contracts. The proposed model integrates contract design, portfolio selection, and tactical production planning decisions. By employing our model, we are able to quantify how a product's inclusion in a contract relates not only to its own profitability but also to the profitability of the remaining products that might be offered to the customer using the same resources. Regarding the optimal flexibility level to offer to a customer, it is explained by the expected sales volume, the discount rate depending on the flexibility level, and the demand variability expectation. We expect this approach supports industrial companies in defining the mid-term sales plan and deciding on the conditions to offer to contract customers.

Language: English

Type (Professor's evaluation): Scientific

No. of pages: 15