A revenue management model in BTO manufacturing over an infinite horizon

Abstract

This research examines the pricing and capacity utilization decisions facing a BTO manufacturing firm serving customers that are segmented by different lead-times. We model the firm's operation as an M/M/1 queue and treat the demand of each segment as being linear in price. We characterize the optimal decisions and present numerical examples to validate the benefits of applying RM in BTO manufacturing and the impacts of lead-times on optimality.