Track: Decision Sciences

Abstract

The production system in the manufacturing industry is divided into two types, namely the Make-to-stock (MTS) and Make-to-order (MTO) strategies which are distinguished by the time orders are received and the execution of the production process. In the MTO system, the customer's order becomes a trigger for the next process and becomes a critical point of the system. The decision to accept and reject incoming orders is the most important activity because it will have a long-term impact on the overall profitability and reputation of the company. This activity is a very strategic action, so support is needed in this activity. This study investigates how the method of receiving orders in the MTO strategy is carried out and designs an assessment of order acceptance using the Multiple Criteria Decision Analysis method so that it can be used as a support in making orders for acceptance decisions. The AHP method was used in this study to obtain priority order criteria and risk probabilities of receiving orders with data obtained from expert interviews. The results of AHP show the order of importance in receiving orders, namely the availability of raw materials, prices, production capabilities, market situations, customers, targets, order fulfillment, and external conditions, also the probability of the risk occurring. Expected monetary value is calculated for each criterion and risk which is then used to help make the right decisions in accepting orders. The entire methodology in this study is explained by using cases in the steel coating industry in Indonesia. The case study shows that EMV and AHP can be used to provide a feasibility assessment of orders received.