ARTICLE IN PRESS

Int. J. Production Economics 93–94 (2005) 239–252 www.elsevier.com/locate/dsw

Advanced available-to-promise: Classification, selected methods and requirements for operations and inventory management
Richard Pibernik
School of Business and Economics, Goethe-University, Mertonstrasse 17, D-60054 Frankfurt, Germany

Abstract Advanced available-to-promise (AATP) comprises of an assortment of methods and tools to enhance order promising responsiveness and order fulfillment reliability. This paper contributes to a theoretical framework for the development of models and algorithms supporting order quantity and due date quoting. At first, alternative generic AATP systems will be identified on the basis of relevant classification criteria. Based upon this classification, the AATP planning mechanisms will be detailed for two generic AATP types. On the basis of the introduced AATP types and the description of selected models we finally derive requirements, which operations and inventory management have to meet in order to ensure a successful application of AATP. r 2004 Elsevier B.V. All rights reserved.
Keywords: Order promising; Available-to-promise; Order management; Capable to promise; Demand management

1. Introduction Advanced available-to-promise (AATP) refers to a variety of methods and tools to enhance the responsiveness of order promising and the reliability of order fulfillment. Based on customer requests (i.e. requested product, order quantity and delivery time window) they support ‘‘order quantity’’ and ‘‘order due date quoting’’. AATP directly links available resources, i.e. finished goods and work in progress, as well as raw materials, production and distribution capacity with customer orders in order to improve the overall performance of a supply chain (Chen et al., 2001). The major goals pursued with the implementation of AATP are (1) the improvement of on time delivery by generating reliable quotes, (2) the reduction of the number of missed business opportunities by employing more effective methods for order promising and (3) an enhancement of revenue and profitability by increasing the average sales price (Kilger and Schneeweiss, 2000).
E-mail address: pibernik@wiwi.uni-frankfurt.de (R. Pibernik). 0925-5273/$ - see front matter r 2004 Elsevier B.V. All rights reserved. doi:10.1016/j.ijpe.2004.06.023

J. AATP implementation imposes on operations and inventory management. Their functional scope can vary significantly. order-specific sales and profit margins. Based upon this classification. operations and inventory management have to meet in order to enable a successful application of AATP. 2002. 2002) as well as research papers introducing AATP methods in regard to specific practical ATP applications. This paper provides a framework supporting the successful development and implementation of AATP and points out the requirements. Major contributions have been made by Chen et al. 2001. Allocation is based on a coefficient cij which is supposed to represent ‘‘suitability’’ of an available portion i of inventory on hand for the fulfillment of customer order j. . such as order quantity and due date quoting on the basis of available supply chain resources and alternative measures in case of an anticipated shortage of finished goods or manufacturing resources. However. ‘‘Conventional’’ ATP. The proposed model is focused on a particular AATP type: ‘‘Batch AATP’’ for a configure-to-order case in computer manufacturing. Very few contributions provide quantitative methods for quantity and due date promising. the AATP planning mechanisms will be detailed for two generic AATP types. (2002) consider a similar AATP type (batch AATP for the assembly of TFT Displays) and present an algorithm which subsequently allocates customer orders to relevant resources on the basis of customer-specific due dates. Literature review The relevant literature on order promising and ATP can be broadly subdivided into textbook and management-oriented publications (e. We derive the requirements. Pibernik / Int. Taylor and Plenert (1999) present a basic approach for ‘‘finite capacity promising’’. The coefficients’ values are calculated on the basis of individual indicators reflecting customer priorities. Jeong et al. the proposed methodology for the determination of the coefficients and consequently also for the allocation of finished goods inventory to customer orders can lead to significant problems in regard to consistency and traceability of the results. 2001). The former only discuss features of ATP in a rather unspecific and general way and briefly comment on the potential benefits of advanced ATP. Publications addressing AATP either discuss the needs or propose features for AATP Systems from a general and rather unspecific perspective or present methods applicable in a particular companyspecific setting only. 2. We introduce a mixed-integer programming model as well as a planning mechanism suitable for batch and real-time order quantity and due date quoting on the basis of finished goods inventory. e[B2]x. Their approach supports a continuous monitoring of the manufacturing capacity that can be utilized to fulfill additional incoming customer orders.1 Kilger and Schneeweiss (2000) as well as Fischer (2001) 1 As depicted in Pibernik (2002). At first. Fischer (2001) proposes a mixed-integer programming model for allocating available finished goods inventory to a set of customer orders. (2002.. ‘‘Advanced’’ ATP provides a broader scope of functions. a limited number of theoretically founded contributions have been made. Fischer. The authors develop mixed-integer programming models that allocate resources among customer orders that arrive within a pre-determined time interval (batching-interval). commonly implemented in ERP. The development of methods and their application to support order promising has primarily been driven by providers of ERP and APS. Kilger and Schneeweiss.g. they usually neither consider the different company-specific requirements or different configuration alternatives for AATP nor do they demonstrate suitable methods supporting order quantity and due date quoting.ARTICLE IN PRESS 240 R. alternative generic AATP types will be identified on the basis of relevant classification criteria. 2000. Until now. Production Economics 93–94 (2005) 239–252 AATP is usually integrated in ERP systems and Advanced Planning Systems (APS). as well as penalty costs for early or late delivery. merely determines the availability of finished goods at certain points of time in the future. Knolmayer et al.

finished goods inventory. In the following section. The customer order will have to be denied if no feasible alternative strategies can be identified and employed. and even production and distribution capacities (see Chen et al. In case of an anticipated shortage of finished goods or supply chain resources. Considering the previously described research in regard to order promising and fulfillment. 3.2.1. Pibernik / Int. A pre-condition for AATP based on supply chain resources is detailed information regarding supply chain capacity requirements for each product included in the product range. customer’s delivery time window.g. how a real-time planning algorithm should be designed in order to support quantity and due date quoting. partial deliveries and deliveries of substitute products. AATP methods and systems need to be classified on the basis of relevant criteria in order to facilitate the implementation of models and algorithms for order quantity and due date quoting. 3. determines a reliable due date within the customer’s delivery time window and assigns the required quantity of finished goods in supply or the requisite amount of supply chain resources (semifinished goods. this paper aims at a theoretical foundation of AATP. If the manufacturer or retailer anticipates the availability of the ordered quantity within the customer’s delivery time window. It provides a decision making mechanism for allocating available supply chain resources to customer orders and determining order quantity and due date quotes (see e. 2001). Generic advanced ATP types The initial characteristic used for classifying AATP is. production capacity). It provides information regarding product availability by determining the ‘‘uncommitted portion of a company’s inventory and planned production. implemented in ERP systems. the routing plan as well as information on manufacturing and distribution capacity requirements must be available to perform the resource allocation. . As we will demonstrate. Production Economics 93–94 (2005) 239–252 241 describe in a very general way. AATP based on finished goods inventory is applicable in a make-tostock manufacturing environment only. including raw materials. We present a well-founded classification of alternative AATP types and derive requirements for operations and inventory management on the basis of generic AATP methods which are appropriate for implementation in supply chain management software suites and have not yet been considered in the relevant literature. should be generated and assessed. 2001).g. Therefore. supply chain lead times and supply chain resources. AATP based on supply chain resources is appropriate in make-to-order production. Chen et al. Advanced ATP based on supply chain resources represents a systematic resource allocation process. the bill of material. Conventional ATP.. maintained in the master schedule’’ (APICS.ARTICLE IN PRESS R. J. feasible alternative strategies to fulfill the customer’s order. As mentioned previously. This decision must be based upon the ordered quantity. the relevant characteristics will be described in detail and used for specifying generic AATP types. advanced ATP provides a decision making mechanism for allocating available finished goods inventory to customer orders and concluding order quantities and due date quotes. quantity and due date quoting can either be performed on the basis of finished goods inventory or on the basis of supply chain resources. An outline of advanced ATP functions A manufacturer or retailer has to decide whether to accept or deny a potential customer order.. raw materials. work-in-process. 1987) While conventional ATP is simply a monitoring of the uncommitted portion of current and future available finished goods. what we shall call the ‘‘availability level’’. he confirms the customer’s order. is always based on finished goods inventory. e. A classification of advanced ATP 3. finished goods.

Whilst performing the usual order quantity and due date quoting. further functionalities of AATP are currently discussed (see e. On the one hand. Passive AATP Systems do not have direct impact on manufacturing resource planning apart from determining the accepted orders and their due dates. at the end of each day or week. 2001). order quantities and due dates are quoted. 2002. e. Using the main characteristics outlined above. on the other hand it has impact on models and algorithms employed for performing order quantity and due date quoting (see Section 4). Chen et al. whereas passive AATP has greater applicability in a make-tostock environment. derived above. In Section 4. They are. 3. These are illustrated in Table 1. When employed in real-time mode. So-called passive AATP Systems receive information regarding finished goods and supply chain resource availability from the manufacturing resource planning system. the potential customer orders arriving within a predetermined time interval (batching-interval) are first collected and then processed together by a model or algorithm. If AATP is operated in batch mode.ARTICLE IN PRESS 242 Table 1 Generic AATP types R. identified in the previous section. active AATP generates or modifies the master schedule. Active AATP is integrated in the company’s manufacturing resource planning. it has to be considered. Furthermore. Fischer.g. Passive AATP does not have any limitations in regard to the production type and is therefore also applicable in large batch and bulk production. order quantity and due date quoting is completed at the time of a customer’s request (see e. Its application in a large batch or bulk production opposes the generally pursued goal of high and even capacity utilization. it will become clear that this categorization is essential for an accurate characterization and also implementation of different AATP methods. however. Additional advanced ATP functionalities In addition to the functionalities. Pibernik / Int. eight generic AATP types can be derived. Based on this information. that simultaneously or sequentially determines order quantities and due dates. Kilger and Schneeweiss.3. Thus.g. Active AATP is limited to small batch and single unit production. 2001. J. independent of the employed AATP type and can therefore be considered as general ‘‘addon’’ features to the generic AATP types. 2000). Thus AATP simultaneously determines and adjusts the master schedule as well as the order quantity and due date quotes. the AATP planning mechanism is executed periodically. the operating mode of AATP affects customer response times and therefore the customer’s perception of the service provided by the company. AATP can run in real-time or batch mode. that active AATP’s application is especially suitable in a make-to-order production environment. Three different strategies can be supported by AATP: . The request triggers the AATP planning mechanism.g. Production Economics 93–94 (2005) 239–252 Availability level Finished goods (FG) Supply chain resources (SCR) RT/SCR/A B/SCR/A Active (A) RT/SCR/P B/SCR/P Passive (P) Operating mode Batch (B) Real-time (RT) RT/FG/A B/FG/A Active (A) RT/FG/P B/FG/P Passive (P) Interaction with manufacturing resource planning The second characteristic used for classifying AATP is its operating mode.. These functionalities mainly refer to strategies applied in case of an anticipated shortage of finished goods or supply chain resources. The last characteristic used for classifying AATP is the interaction with manufacturing resource planning.

The decision maker then selects a solution on the basis of data regarding relevant costs and customer’s priority. For instance.g. Multi-location AATP should take different manufacturing and transportation lead times and costs into account. they can be combined in the AATP planning mechanism in such a way. Production Economics 93–94 (2005) 239–252 243 AATP with substitute products: In certain cases substitute products can be delivered within the given delivery time window instead of the product. If partial deliveries are taken into account. J. partial deliveries can be taken into account. inventory and transportation management: Reliable order promises will only be generated if the relevant information is provided and processed accurately and on time and if operations. it is possible to first check whether finished goods or manufacturing resources are available at any of the locations in the distribution or manufacturing network. If this is not the case. the successful application of appropriate methods also imposes specific requirements on both information processing and the performance of operations. substitute availability and acceptance can be considered and if necessary. available finished goods and resources can be sourced at other locations. originally ordered by the customer. that all feasible solutions are determined and assessed simultaneously. 4. . by technical restrictions. they can also include substitute products. AATP with partial delivery: If the ordered quantity is not available within the given delivery time window. it becomes clear that companies have to identify the generic AATP type and the additional functionalities which meet their specific requirements. and if its use is not limited. make-to-stock or make-to-order) and on customers’ requisites and preferences (e. This procedure will be detailed in Section 4. of course.g. This depends. e. Besides generating these strategies sequentially. introduced in the previous section: Batch and real-time AATP on the basis of finished goods inventory. only valid if the customer generally accepts partial deliveries.2. We will also utilize these results in order to derive special requirements associated with the application of the remaining AATP types introduced in the previous section. of course. depending on the proposed locations. The customer can receive partial deliveries from different locations. Pibernik / Int. where the first partial delivery is carried out within the given time window. These requirements mainly depend upon the design of the manufacturing system (e. In this section we describe adequate methods supporting two of the generic AATP types. inventory and transportation management are actually capable of producing and delivering the ordered quantities in accordance with the due dates and order quantities determined by AATP.g. Therefore. Selected methods for advanced ATP on the basis of finished goods inventory From the characterization and classification of different AATP types in the previous section. Multi-location AATP: If the customer order cannot be fulfilled with the finished goods or supply chain resources available at a certain location. These different strategies can be combined in any possible sequence in the AATP planning mechanism.ARTICLE IN PRESS R. Selecting an appropriate AATP configuration determines the specific methods employed for generating due dates and order quantities. This option is. This will facilitate an analysis of the specific requirements which have to be met in order to effectively fulfill order quantity and due date quotes (see Section 6). on the availability of a product. However. the customer will accept instead of the ordered product. The customer will only accept the substitute if it provides at least the same utility as the original. the AATP planning mechanism has to be applied to a distribution or manufacturing network rather than only to a single location. then AATP should determine the quantities and delivery dates for each partial delivery. if customers require real-time information on availability and delivery dates). the customer order can be fulfilled with two or more partial deliveries.

associated with the denial of a potential customer order i 2 Aðta Þ.1. the model also accounts for partial deliveries. We further assume that we can calculate a profit dbi for every potential order i 2 Aðta Þ. ta À 2t.2). The customer requires delivery of i i i quantity d o within the time window ½zu . denoted by atpt . Every potential customer order i 2 Aðta Þ can be characterized by a quadruple ðd u . ½ta þ T À 1. te Þ. We assume that the customer orders were collected during the batching-interval ½ta À t. Pibernik / Int. .. ½te À 1. ½ta þ 1. ta þ 1Š. based on the quantity bt of inventory on hand at point of time t ðt ¼ ta þ 1. te Þ a given quantity of qt units of the product is produced and put into stock. if the due date of the first partial delivery of order i 2 Aðta Þ is t 0. . . ta þ t. we present an optimization model which can be employed for a simultaneous generation of order quantities and due dates for a given set of potential customer orders. qt is determined by the master schedule.. t determines the points of time ta. It generates a schedule that specifies the quantities and due dates of whole or partial deliveries for every accepted customer order in the batch. . Let A(ta) denote the set of potential customer orders for a single product. te g and latest date of delivery zo 2 fta þ 1. that at every i i i i point of time t ðt ¼ ta þ 1. . Production Economics 93–94 (2005) 239–252 4. 2001). where toT represents the length of the batching-interval. . . the model is run on a rolling horizon basis (see e. zu . zo Š and delivery of the remainder at a point of time t4zo . .g. In general. . . . With given values for qt. Uncommitted inventory and planned production is reserved according to the committed due dates. . d o . We therefore assume. bt and rt. . we can calculate the uncommitted (available-to-promise) quantity of finished goods at point of time t. Let bt and rt denote the inventory on hand and the committed quantity of finished goods at point of time t. We assume. Chen et al. . Both inventory on hand bta þ1 at ta þ 1 and the committed quantities rt are determined by AATP runs executed at ta À t. . . zo Þ of minimum order quantity d u . The point of time t denotes the beginning and t þ 1 the end of a time period ½t. . To exemplarily illustrate the impact of the additional functionalities. . te Šg. maximum order quantity d o . . . Let ½ta . ta þ 2Š. fki accounts for contract penalties and the loss of future profits if the customer switches to a different supplier. A model for batch AATP based on finished goods inventory When applying a batch AATP. e. . zo Xzu . 24 h. that the qt units can be delivered to a customer at the point of time t. ta Š. earliest date of delivery zu 2 i i i i i i i fta þ 1. however. We further assume. collected during the most recent batching-interval ½ta À t.ARTICLE IN PRESS 244 R.g. . . To formulate a mixed-integer programming model for the determination of order quantities and due dates we define the following decision variables: x1 ðtÞ: quantity of the first (partial) delivery at point of time t for order i 2 Aðta Þ i x2 ðtÞ: quantity of the second partial delivery at point of time t4zo for order i 2 Aðta Þ i i u1 ðtÞ ¼ i & 1. ta þ 1Š. The AATP planning mechanism is executed at the end of the batching interval. te Š be the AATP planning horizon for one batch. described in Section 3. J. ta þ 2t. . ta þ TŠ ¼ ½te À 1. this assignment problem can either be solved simultaneously for all orders in the batch by employing an optimization model or by applying an adequate algorithm which successively processes the orders on the basis of a pre-determined order sequence. . Therefore. consisting of T discrete time periods. which are ‘‘available-to-promise’’.. else ' . . In the following. at which the AATP planning mechanism is executed. . an assignment problem has to be solved: The customer orders in the batch have to be assigned to those quantities of finished goods. accept a partial delivery of the minimum i i i quantity d u within ½zu . We consider a penalty fki . ta Š. Let lk be the holding costs for finished products per unit and time period.3. . He will. the potential customer orders arriving within a pre-determined time interval (batching-interval) are first collected and then processed together in order to determine order acceptance or denial as well as quantities and due dates for accepted orders (see Section 3. . . zo Š. t þ 1Š 2 f½ta . . te g.

i u1 ðtÞ ¼ 0 for all i 2 Aðta Þ. . zo Š. x1 ðtÞXd u u1 ðtÞ i i i x1 ðtÞpd o u1 ðtÞ i i i zi X t¼zu i o X i2Aðta Þ dbi vi À te X t¼ta þ1 lk bt À te X X t¼ta þ1 i2Aðta Þ tk u2 ðtÞ À i X i2Aðta Þ fki ð1 À vi Þ ð1Þ for all i 2 Aðta Þ. else ) : ) . te Š. t ¼ ta þ 1. i i t ¼ ta þ 1. 1g for all i 2 Aðta Þ. t ¼ ta þ 1. . . . . For simplicity and without loss of generality. else 0. J. . . ð5Þ x2 ðtÞpðd o À d u Þu2 ðtÞ for all i 2 Aðta Þ. zo Š. ð4Þ btþ1 ¼ bt þ qt À x1 ðtÞ þ x2 ðtÞ. te . . t ¼ ta þ 1. i i ð6Þ ð7Þ ð8Þ ð9Þ ð10Þ ð11Þ ð12Þ u1 ðtÞ 2 f0. . te À 1. t ¼ ta þ 1. . . 1g for all i 2 Aðta Þ. te .t. te . The decision maker has to solve the following interrelated problems: (1) Determine the potential orders i 2 Aðta Þ which will be fulfilled within the planning horizon. . t 2 ½zu . . Pibernik / Int. ð2Þ ð3Þ x1 ðtÞ þ i te X t¼zo þ1 i x2 ðtÞ ¼ d o vi i i X i2Aðta Þ for all i 2 Aðta Þ. we assume a delivery time of zero i for every order i 2 Aðta Þ. . . if order i 2 Aðta Þ is fulfilled 0.ARTICLE IN PRESS R. Production Economics 93–94 (2005) 239–252 245 ( u2 ðtÞ i ¼ ( vi ¼ 1. . By tk we denote the additional handling and shipping costs associated with the second delivery. (2) Determine quantities and due dates of partial deliveries for all accepted orders. i u1 ðtÞ ¼ 0 for all i 2 Aðta Þ. if the due date of the second partial delivery of order i 2 Aðta Þ is t 1. i te½zu . we can employ the following mixed-integer programming model: max P ¼ s. i i i i atpt ¼ bt À rt . These have to be considered if x2 ðtÞ40. . i i t 2 ½zo . te Š. i u2 ðtÞ 2 f0. . . te . for all i 2 Aðta Þ. i u1 ðtÞ ¼ vi i for all i 2 Aðta Þ. i X t¼zu i zo i te½zo . . . For solving these problems simultaneously.

.g. e. additional handling and shipping costs resulting from partial deliveries as well as (intangible) penalties associated with order denial. The model can also be enhanced in order to account for the multi-product case (see Pibernik. . . d o Š. 4. However. The model generates an ATP schedule that can be represented by a jAðta ÞjTmatrix x. ð13Þ vi 2 f0. This model can be further customized to meet company-specific demands. Constraint (4) ensures that the demand d o is met for every accepted order. J. . We will now outline an appropriate planning mechanism for a multi-location real-time AATP based on finished goods inventory and substitute products. the application of real-time AATP is feasible.ARTICLE IN PRESS 246 te X t¼zo i R. 1g for all i 2 Aðta Þ. te Þ. easily include constraints. te : ð14Þ ð15Þ The objective function (1) accounts for profits from promised orders. Furthermore. products are highly standardized and sold via a web-based retail site. A planning mechanism for real-time AATP based on finished goods inventory Customer requirements and preferences in regard to the response time (see Section 3. Constraint (6) links the variables u2 ðtÞ.g. Customer requirements mainly depend upon the product subject to order quantity and due date quoting and the relevant distribution channel. The i uncommitted (available-to-promise) quantity of finished goods is provided by constraint (7). . a decrease in customer service. Order promising then requires a planning mechanism which instantly determines product availability. . generates order quantities and due dates and considers alternative fulfillment strategies in case of shortages for every incoming order. indicating the second i partial delivery taking place at point of time t. Pibernik / Int.dsmserver. . inventory costs for finished goods. Balance of finished i i i goods inventory is provided by constraint (5). x2 ðtÞÞ ði 2 Aðta Þ. The model’s i i objective is to determine an optimal schedule x* which maximizes overall profit P.2. customers may not be willing to accept the (longer) response times associated with AATP operated in batch mode. The model is currently being employed for order quantity and due date quoting at Merz Pharmaceuticals. 2003). the quantity of the second partial delivery. generally leads to a decrease in performance compared to AATP operated in batch mode. In this case. When. A corresponding Lingo 8. Components of this matrix are the tuples ðx1 ðtÞ. Real-time order quantity and due date quoting for a . different customer priorities and the strategies considered in case of an anticipated shortage of finished goods.0 file as well as experimental data can be obtained from http://data. t ¼ ta þ 1. It should be noted. resulting from partial deliveries instead of complete deliveries can be incorporated in the model by including additional penalties in the objective function. . t ¼ ta þ 1.2) may necessitate AATP to be operated in real-time mode. which ensure that certain customers do not receive any partial deliveries and a latest possible delivery date for the second partial delivery can also be taken into account without complications. atpt X0. firms may be forced or may be willing to put up with a loss of AATP performance in order to meet customer requirements or enhance customer service in regard to the response time. Neither customer priorities nor the consequences of order acceptance on the fulfillment of orders arriving at a later point in time can adequately be considered. e. Production Economics 93–94 (2005) 239–252 u2 ðtÞp1 i for all i 2 Aðta Þ. which is inevitable when operating AATP in real-time mode. We can. bt . and x2 ðtÞ.net/atp. Constraints (8)–(14) define the domains of the model’s integer decision variables. Constraints (2) and (3) ensure that the quantity of the first partial delivery is within the given interval ½d u . that processing each order separately. Employing real-time AATP implies that order quantities and due dates are determined at the time an order or request is received.

i. J. Zo0 : (earliest date of delivery) or t ¼ i i i . Real-time AATP planning mechanism. 1. 1. Z o0 : If the i i i  u oà ^ ordered quantity is available. We pre-suppose that every customer is assigned to a definite warehouse location.g. Z o0 : Thereupon. reservation and recalculation of uncommited quantity XOR Order denial End of AATP run Fig.e. At first. Pibernik / Int. Production Economics 93–94 (2005) 239–252 Customer order has been received Determine uncommited quantities of product at assigned location Check if order can be fulfilled on the basis of uncommitted quantity XOR 247 Order can be fulfilled within time window Order cannot be fulfilled within time window AND Determine uncommited quantities at alternative locations AND Determine availability of substitute products Generate feasible fulfillment strategies XOR Feasible fulfillmentstrategies available Assessment of alternative strategies No feasible fulfillment strategies available Propose first strategy to customer XOR Customer accepts strategy Customer does not accept strategy Propose second strategy to customer XOR Customer accepts strategy Customer does not accept strategy XOR XOR Confirmation. a due date t 2 È i0 . t ¼ min tjatpt Xd o0 . e. if atpt Xd o0 applies for any 2 Zu0 . single incoming order is illustrated in Fig. Z i0 is determined. the uncommitted quantity  finished goods atpt is determined for every point of time t of à within the customer’s delivery time window Z u0 . The planning mechanism is triggered by the arrival of a prospective customer order i0 . t 2 Z u0 . The due can be determined on the basis Z  ÃÉ ^ ^ of a specific assignment rule.ARTICLE IN PRESS R. it is assessed whether the order can be i i  à fulfilled within the customer’s delivery time window.

the customer is informed accordingly. In regard to the former. delivery is confirmed and the uncommitted quantity recalculated as described previously. i. 1 we can derive a formal algorithm for real-time order quantity and due date quoting which can be directly executed by a software application supporting real-time AATP. From the description in Fig.g. Both the batch model and the realtime planning mechanism. the planning mechanism has to support their assessment on the basis of detailed information on handling and shipping costs. The relevant data can be divided into data on the availability of finished goods as well as data regarding handling and shipping lead times and costs (see Sections 4. handling and . Consistently. If the customer does not accept any of the alternative fulfillment strategies. uncommitted finished goods quantities as well as customer priority and preference. Otherwise. include specific rules for identifying and assessing alternative strategies in case of a temporary shortage of finished goods. e. We will first focus on AATP based on finished goods inventory for which suitable methods were introduced in the previous section. 5. availability of the original product as well as substituted products is assessed at alternative locations in the company’s distribution network. feasible fulfillment strategies are generated. the corresponding quantities of finished goods are reserved.ARTICLE IN PRESS 248 R. quantity and date of completion for the products produced within the AATP planning horizon. the order will be rejected. A corresponding formulation of an algorithm is provided in the appendix of this paper. Production Economics 93–94 (2005) 239–252 È Â ÃÉ max tjatpt Xd o0 . which must specify exactly the type. Furthermore. clarify the information which has to be provided by operations and inventory management software systems in order to successfully perform order quantity and due date quoting. These modifications can. the second strategy in sequence will be proposed. Thereupon we will also consider additional requirements resulting from active and passive AATP based on supply chain resources. The depicted planning mechanism can be further customized in order to meet company-specific requirements. From the AATP methods shown in Section 4 it becomes clear that models and algorithms generating order quantity and due date quotes based on pertinent information concerning customer orders.2). operations management has to provide an exhaustive master schedule. Advanced ATP’s requirements for operations and inventory management The characterization of AATP types in Section 3 and the description of adequate methods in Section 4 facilitate an analysis of the requirements operations and inventory management have to meet in order to successfully quote order quantities and due dates. Inventory management must provide the real inventory on hand throughout the AATP planning horizon and the previously committed quantities of finished goods. cost and required time for shipping and handling. J. If the customer accepts the first approach in this sequence.1 and 4. Determination of alternative strategies has to be defined by a set of rules complying to company-specific conditions. operations and inventory management have to provide the relevant information and data for the models and algorithms applied.e. introduced in the previous section. If a multiple number of alternative fulfillment strategies are available. the required quantity is reserved and the uncommitted quantity of finished goods is recalculated for a subsequent execution of the planning mechanism. If the product or substitute is available. Pibernik / Int. t 2 Z u0 . In the event of a shortage of finished goods at the assigned warehouse location. This assessment then determines the sequence in which the fulfillment strategies are proposed to the customer. By this set of rules it must be ensured that only feasible strategies are generated from the company’s and the customer’s viewpoint. unit profit margins for regular and substitute products as well as customer-specific information such as delivery time requirements and the potential acceptance of partial deliveries and substitute products. After due date determination. Z o0 : (latest date of delivery) in order to maintain flexibility for the fulfillment of i i i orders arriving at a later point in time. represent the core of AATP planning mechanisms. etc.

active AATP on the basis of supply chain resources is not just simply a ‘‘stand-alone’’ mechanism for allocating customer orders to finished goods and supply chain resources on the basis of operations and inventory data. a detailed process analysis in regard to handling and shipping lead times and costs must precede the implementation of AATP. AATP based on supply chain resources needs meticulous information regarding supply chain capacity requirements for each product subject to the AATP planning mechanism being employed. however. it is in fact a vital part of production and inventory planning. AATP performance also depends strongly on the capability of operations and inventory management to actually fulfill the orders. depending on customer and warehouse locations. Clearly. integrated into master scheduling and material requirements planning. Employing a real-time AATP further increases the demands on information provision. Applying multi-location AATP also calls for manufacturing resource planning systems and inventory management systems at the incorporated locations. In addition. AATP requires complete information about supply chain resource availability within the AATP planning horizon. Online access and fast transmission techniques for attaining satisfactory response times and accurate order quantity and due date quotes must be employed. determined by the ability of production planning and scheduling to meet the due dates given by the AATP schedule. Production Economics 93–94 (2005) 239–252 249 transportation capacity as well as costs. Active AATP not only determines due dates and reserves supply chain capacity. Therefore. .ARTICLE IN PRESS R. inventory and transportation planning with the AATP module is essential. promised on the basis of AATP’s calculations. Pibernik / Int. They may. This in turn is subject to the pre-disposition of the AATP model or algorithm engaged to resolve AATP schedules and also. supplying and processing operations and inventory management information is a crucial factor for a successful application of AATP. will ultimately diminish the AATP performance due to discrepancies between the master schedule used for AATP and the implemented master schedule. in fact. When utilizing active AATP. a further amalgamation of the AATP with manufacturing resource planning as well as inventory and transportation management is indispensable. However. The relevant data for performing the real-time planning mechanism has to be made available on a continuous basis. to a large extent. J. yet again on the quality of the information utilized in the AATP planning mechanism. Also. Frequent amendments. It becomes clear that for AATP based on supply chain resources is an extensive integration of manufacturing resource. Subsequent to the requirements specified for AATP based on finished goods. apart from determining the accepted orders and their due dates. To a great extent. need to be on hand. delivery lead times and costs have to be determined on the basis of a detailed analysis of the warehousing. but also is. handling and transportation activities in order to avoid rejection or delayed completion of customer orders due to erroneous information used in the AATP planning mechanism. reserve supply chain capacity on the basis of the orders accepted. The AATP performance depends significantly on the quality of the provided information. the AATP performance is. a precise lead time and cost analysis is indispensable for an accurate assessment of alternative fulfillment strategies. Apparently. Evidently. Essential requirements are the availability and transmission of accurate and error-free data. The committed quantities of finished goods must instantly be updated after executing the planning mechanism (see Section 4. especially of the master schedule. which provide the relevant data on time and in a predefined processable format. when multi-location AATP is practiced. Passive AATP on the basis of supply chain resources does not have direct impact on manufacturing resource planning. Besides that. AATP’s adherence to due dates is affected by the consistency and stability of the master schedule as well as inventory and transportation planning.2). The latter are a pre-requisite for the assessment of alternative fulfillment strategies including deliveries from diverse warehouse locations.

On the basis of such classification as well as characterization of additional AATP features. . we presented a model for batch AATP and a planning mechanism for real-time AATP based on finished goods inventory. Complete delivery of pre-defined substitute products. .g. which is assigned to a specific warehouse location h ¼ 1. the algorithm generates three alternative fulfillment strategies depending upon finished product availability:    Partial deliveries from warehouse location h ¼ 1. Real-time AATP Algorithm The real-time AATP algorithm generates order quantities and due dates for a single order i0 . identified in Section 3. . The models and algorithms presented in this paper cover only two generic AATP types. Both the model and the algorithm can be modified in order to meet company-specific demands and therefore represent a good starting point for further development and implementation of methods supporting AATP. In case of a shortage of finished goods at location h ¼ 1. provided in Section 4 and the requirements for operations management and inventory management. denoted by h ¼ 2. Complete delivery from alternative warehouse locations. . Appendix A. into account. . H. denoted by s ¼ 1. J. . Production Economics 93–94 (2005) 239–252 6. both the fundamentals of AATP.ARTICLE IN PRESS 250 R. taking alternative fulfillment strategies. S. . . e. . Yet. . . H. AATP with partial deliveries. . Conclusions The development of models and algorithms for AATP has to be based on well-founded classification of alternative AATP types. from warehouse locations h ¼ 1. derived in Section 5 can give valuable input for supplementary research and development. Consequently. . Pibernik / Int. further research in the field of AATP is required with regard to the other AATP types.

J. Pibernik / Int. Production Economics 93–94 (2005) 239–252 251 .ARTICLE IN PRESS R.

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