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Supplier Selection in Make-to-Order Manufacturing

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Innovative Quick Response Programs in Logistics and Supply Chain Management

Part of the book series: International Handbooks on Information Systems ((INFOSYS))

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Abstract

When make-to-order (MTO) manufacturers receive unpredictable custom orders, they face a common challenge: quick supplier selection of custom parts and components. This challenge becomes even more serious when the order’s customization level is high, the MTO’s committed delivery time is short, the desired service level is high, and the missing delivery time penalty is severe. This chapter considers an MTO manufacturer who produces a product consisting of several custom parts that cannot be pre-inventoried. To respond to the custom order quickly, the MTO manufacturer can follow the procedures in this chapter to allocate orders to each supplier for each custom part and calculate the associated replenishment cost as well as the probability of meeting the delivery date, using the suppliers’ jobs on hand, availability, process speed, and defective rate. For a given delivery time and service level, a replenishment cost frontier can be generated to provide a range of options to meet customer requirements. This innovative method can be further extended to the case when the delivery time is not fixed and the manufacturer needs to reduce its delivery time to win a customer bid.

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Author information

Authors and Affiliations

  1. Department of Management and Marketing, Jennings Jones College of Business, MTSU Box 75 Middle Tennessee State University, Murfreesboro, TN, 37132, USA

    Jinfeng Yue

Authors
  1. Jinfeng Yue
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  2. Yu Xia
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  3. Thuhang Tran
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  4. Bintong Chen
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Corresponding author

Correspondence to Jinfeng Yue .

Editor information

Editors and Affiliations

  1. Dept. Logistics & Maritime Studies, The Hong Kong Polytechnic University, Yuk Choi Road 11, Kowloon, Hung Hom, Hong Kong/PR China

    T. C. Edwin Cheng

  2. Fac. Applied Science & Textiles, Hong Kong Polytechnic University, Hung Hom, Kowloon, Hong Kong/PR China

    Tsan-Ming Choi

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Yue, J., Xia, Y., Tran, T., Chen, B. (2010). Supplier Selection in Make-to-Order Manufacturing. In: Cheng, T., Choi, TM. (eds) Innovative Quick Response Programs in Logistics and Supply Chain Management. International Handbooks on Information Systems. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-04313-0_9

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