A order mix decision model for make-to-order enterprise

Make-to-stock and Make-to-order are two generic operation modes commonly used in the manufacturing world. The make-to-order enterprise makes the production systems to produce a product only after it is ordered. The enterprise must decide which orders can be accepted to get the optimal profit and meet the due time. This paper addresses a order mix decision model in a make-to-order operation environment. The mathematical model is proposed to select a set of customer orders to maximize the operational profit such that all the selected orders are fulfilled by their deadline. With a given capacity limit on each resource type and its cost rate, solving this model leads to an optimal production mix for the orders over a given time horizon. The conclusion shows that it is not a optimal choice to accept all customer's orders although they can be produced before deadline. This paper tells the enterprise how to select the order mix according to the cost and production capacity planning.