A Study On Orders Decision Based On Real Options Under BTO Circumstances

In today's demand-driven environment, the diversity and personalization of demand give great challenge to the stability of production. Managing the demand effectively to decrease the demand's uncertainty is a reasonable way to solve the contradictions between production and demand. In such circumstance, the build-to-order production is the manufacturing trends in future. However, BTO enterprises are in a dilemma of the production wasting and the orders'losing. Therefore, managing the demand is the problem to be solved urgently in BTO enterprises.Based on the review of the international and domestic literature for the orders'management and the treatment of uncertainty, how to reduce the orders'uncertainty in BTO enterprises was study. The uncertainty of orders generally performs as follows: the content's uncertainty, the price's uncertainty and the delivery period's uncertainty. To deal with the uncertainty of orders'types and quantities, we can hold a reasonable amount of inventory or increase the production flexibility. And the thesis focuses on studying the price's and the delivery time's decision. The price decision-making stage in the traditional orders decision-making process is built on the static price. In the light of the dynamics of the orders price in BTO enterprise, the thesis will try to use the real options to manage the orders'price, and build the price decision model. The time when the order comes to the enterprises is constantly changing. In some time, lots of orders reach to the enterprise and in some time only a few. Moreover, the delivery time decision-making stage in the traditional decision-making process is a single stage decision, not to consider the demand situation of the next stage. In accordance with the uncertainty of the delivery time, the delivery time decision model based on the real option was built in this thesis.