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Flexible Order Allocation Model Based on Portfolio Strategy in ATO Supply Chain Environment

Increasingly, rapid response to customer demands and flexibility to handle uncertainties are becoming strategically important in the marketplace. Enterprises that endeavor to achieve these two goals demand sophisticated approaches to conduct order promising and fulfillment. In this paper, a portfolio strategy of substitution and two-stage delivery for order allocation is presented. Based on the strategy, we establish a flexible order allocation model for Assemble-to-Order Supply Chain to study how to respond to orders more quickly and meet the personal requirements of customers more efficiently in the multi-plant-supply and multi-client-demand environment. The model takes into account a variety of supply chain constraints, such as supply constraints of raw materials, supply constraints of alternative products, production capacity and the feasible point of order-splitting. Moreover, we study the enterprise profits and the customer service level under four given conditions - with no strategy, the substitution strategy, the two-stage delivery strategy or the portfolio strategy of substitution and two-stage delivery. By comparison, the practicality of the model is proved.