Revenue Management in a Make-to-Order Environment

  • Stefan Rehkopf
  • Thomas Spengler
Part of the Operations Research Proceedings book series (ORP, volume 2004)


Manufacturing companies in a make-to-order environment sell customer specific products. Usually, a company offers more than one product, faces a stochastic demand, and a time-varying product price. The latter cannot entirely be set autonomously by the company due to competitors. The decision the company has to make for an incoming order is whether to accept or reject the order, depending on the remaining capacity, the contribution margin of the order and the orders expected for the future. In our contribution we will discuss if the methods for the airline revenue management are applicable to the described problem. After giving an overview about the requirements a decision support system ought to fulfill to improve the order selection process in a make-to-order environment, we will discuss the differences of such a system to existing revenue management approaches in service industries. Subsequently, we give a mathematical formulation for the described problem and apply it to a simplified practical example.


Decision Support System Capacity Utilization Contribution Margin Spot Market Stochastic Demand 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.


  1. 1.
    Bertsimas, D., Popescu, I. (2003): Revenue Management in a Dynamic Network Environment. Transportation Science, 37, 257–277CrossRefGoogle Scholar
  2. 2.
    Harris, F. H., Pinder, J.P. (1995): A Revenue Management Approach to Demand Management and Order Booking in Assemble-to-Order Manufacturing. Journal of Operations Management, 13, 299–309CrossRefGoogle Scholar
  3. 3.
    Klein, R. (2001): Quantitative Methoden zur Erlösmaximierung in der Dienstleistungsproduktion. Betriebswirtschaftliche Forschung und Praxis, 53, 245–259Google Scholar
  4. 4.
    Kolisch, R. (2001): Make-to-Order Assembly Management, Berlin et al.Google Scholar
  5. 5.
    McGill, J., van Ryzin, G. (1999): Revenue Management: Research Overview and Prospects. Transportation Science, 33, 233–256Google Scholar
  6. 6.
    Richardson, P. K. (1998): Steel Price Determination in the European Community. Journal of Product & Brand Management, 7, 62–73CrossRefGoogle Scholar
  7. 7.
    Stadtler, H., Kilger, C. (2000): Supply Chain Management and Advanced Planning, Berlin et al.Google Scholar
  8. 8.
    Talluri, K., van Ryzin, G. (1998): An Analysis of Bid-Price Controls for Network Revenue Management. Management Science, 44, 1577–1593Google Scholar
  9. 9.
    Tscheulin, D., Lindenmeier, J. (2003): Yield Management — Ein State-of-the-Art. Zeitschrift für Betriebswirtschaft, 73, 629–662Google Scholar
  10. 10.
    Verein Deutscher Eisenhuttenleute (1992): Steel Manual, DüsseldorfGoogle Scholar
  11. 11.
    Weatherford, L., Bodily, S. (1992): A Taxonomy and Research Overview of Perishable-Asset Revenue Management: Yield Management, Overbooking and Pricing. Operations Research, 40, 831–844CrossRefGoogle Scholar

Copyright information

© Springer-Verlag Berlin Heidelberg 2005

Authors and Affiliations

  • Stefan Rehkopf
    • 1
  • Thomas Spengler
    • 1
  1. 1.Institute for Economics and Business Administration, Department of Production ManagementTU BraunschweigBraunschweigGermany

Personalised recommendations