Integration of Multi-Criteria Decision Analysis and Negotiation in Order Promising

In an inter-firm supply chain, it is rather an exception than a rule that a producer can satisfy the initial request of a customer. Instead of rejecting the offer that would yield substantial immediate and long-term opportunity costs, it is important for the producer to immediately engage in an iterative search for a counter-offer that both meets the negotiated needs of the customer and the adjusted production capacity. In this paper, we deal with order promising in the Supply Chain Management. We consider the Available-to-Promise and the Capable-To-Promise functions as they are part of a production-distribution network. We present a hybrid and iterative method that combines an optimization technique based on a MILP model with a negotiation approach using multi-attribute utility functions.