Acceptance of the lead times

The acceptance of the lead time that the firm offers for an ordo may depend on a lot of elements diffoent from the lead time itself. There may be a long tom agreement between the firm and the client, according to which the client accepts all lead times that are less than or equal to an agreed maximum. But also the quality of previous products and the price that is offered will have an influence upon the reaction of the client with respect to a possible withdrawal of an order. 

In the exan les in this chapter we will consider two simple models. In both models the maximum lead time that is proposed for ordo of priority 1 will be 5 periods and for orders of priority 2 it will be 3 periods. In the first model we will assume that the offered lead times will all be accepted. In the second model we will assume a linearly decreasing probability for the acceptance of an order. In Section 4.4. we have considered the same model. The probabilities are slightly different for the different priorities. For orders of priority 1 we assume that the probability that a client accepts a lead time k for an order is given by  

For both priorities a lead time of 1 period is always accepted. 

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An extended (x,7> e can also be used for proposing lead times for the newly arrived orders. This can be done by making a preliminary production plan, which is based on the expected number of penalty points for the various types in future periods. In the rule for proposing lead times, the basic element is the preliminary production plan, but we can also have additional rules taking into account the cqracity constraints, maximum lead times and probabilities for acceptance of the lead times. Some examples of such rules have been discussed in this monograph. 

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