Introducing quotation and negotiation structure in the order acceptance decision model^*

In Make-to-Order (MTO) system the Order acceptance (OA) decision usually stems from the result of negotiation between the customer and the manufacturer. In such a system, the quotation submitted and the negotiation strategy adopted by the manufacturer play a major role in the decision processes. In practice, OA decision is often functionally separated with the quotation and negotiation. In this paper, fundamentally, we incorporate quotation and negotiation structure into OA decision model to control the workload in the system. We use the notion of robustness and negotiation margin to generate quotation of an order. While two different strategies, which vary from hostile to generous nature, are developed to negotiate with the customer. The strategy utilizes aspiration level, limit level and customer preferred line (CPL) to obtain new offer during the negotiation process. Numerical analysis is presented to illustrate the working mechanism of proposed method.