Optimal Decision Tree for Cycle Time Prediction and Allowance Determination

The due-date quotation is a key performance indicator for managing customer orders which would influence customer acceptance and/or the future potential lateness penalty. The production cycle time and allowance time are added and used as the due date of order. The objective is to maximize the hit rate which is the percentage of the orders fulfilled within the time limit of quoted due date. Under the framework of supervised machine learning, we explore the new developments in feature selection and the optimal decision tree to predict cycle time by using mixed-integer optimization. Cycle time allowance could be added to the predicted cycle time or incorporated in an optimization problem as a managerial decision variable. Case studies are used to demonstrate the effectiveness of this approach, and their performances are comparable to the other popular ensemble tree approaches, such as random forests and gradient boosting.