Abstract
In this paper we develop and evaluate an integrated real-time order management model that considers customer required due dates in a build-to-order production environment. The model allows for renegotiation of the due date to a later date in exchange for a penalty cost, or price discount, if the original due date cannot be met because of capacity constraints or a negative profit impact associated with the order. The results demonstrate the advantage of our model over existing order promising models such as the CTP and PTP, and show the value in having a strategy for renegotiating customer orders if they cannot be delivered in the requested period. The study also shows that an appropriate penalty level can be established between lower and upper boundaries to maximize profits and service levels for the firm.