Due date (DD) quotation and capacity planning in make-to-order companies: results from an empirical analysis

Zorzini, M and Corti, D and Pozzetti, A (2008) Due date (DD) quotation and capacity planning in make-to-order companies: results from an empirical analysis. International Journal of Production Economics, 112. pp. 919-933. ISSN 0925-5273

Abstract

The current competitive context puts manufacturers under increasing pressure to provide products and services that meet the particular requirements of individual customers, calling for high flexibility in business processes. The complexity and the uncertainty of demand are particularly high in customized contexts, such as the make-to-order (MTO) and engineer-to-order (ETO) sectors, where the ability to deal with more and more differentiated requirements in terms of product features, delivery lead time and cost is crucial. In order to be competitive in such a context, due date (DD) quotation and capacity evaluation at the customer enquiry stage are of strategic importance, having a large impact on the company performance. Despite the large impact on company performance, the importance of DD setting and order acceptance processes and related decisions is often underestimated in practice and the issue is underexposed in the literature. As the applicability of most of the proposed models is limited and there are too few empirical studies describing the practices adopted for capacity and delivery lead-time management in industrial contexts, this study is aimed at developing an understanding of these practices based on a sample of 15 Italian capital goods manufacturers. An interpretative framework is proposed in order to identify the main contextual factors impacting company choices. A model that formalizes the decision process for setting DDs in the analyzed cases is then proposed, suggesting different procedures depending on the type of enquiry submission (DD set by companies or customers) and customer order (fast or slow).