Order selection and pricing methods using flexible quantity and fuzzy approach for buyer evaluation

To link to full-text access for this article, visit this link: http://dx.doi.org/10.1016/j.ejor.2007.03.003 Byline: Hung-Tso Lin, Wen-Ling Chang Keywords: Production; Order selection; Pricing; Fuzzy sets Abstract: This paper presents the methods for order selection and pricing of manufacturer (supplier) with make-to-order basis when orders exceed production capacity. By quoting the concepts of triangular fuzzy numbers and linguistic variables, a fuzzy approach to evaluating buyers by taking into account both positive and negative criteria is proposed. According to the classified results of buyers, the orders will be produced with priority, declined, or determined by MIP model. The fixed quantity MIP model and flexible quantity MIP model are employed to determine the produced orders along with the production quantity and the reference amount for price reduction. By applying the concept of TOPSIS, the closeness coefficients for satisfaction grades of orders and for ranking values of buyers are used as the adjusting rates in the final pricing MIP model to set segmented price. Author Affiliation: Department of Distribution Management, National Chin-Yi University of Technology, 35, Lane 215, Chung-Shan Road, Section 1 Taiping City, Taichung Country, Taiwan, Republic of China Article History: Received 19 October 2006; Accepted 7 March 2007