Price, delivery time guarantees and capacity selection

被引:209
作者
So, KC [1 ]
Song, JS
机构
[1] Hong Kong Polytech Univ, Dept Management, Kowloon, Peoples R China
[2] Univ Calif Irvine, Grad Sch Management, Irvine, CA 92697 USA
[3] Columbia Univ, Dept Ind Engn & Operat Res, New York, NY 10027 USA
关键词
time-based competition; service guarantees; service quality; capacity planning;
D O I
10.1016/S0377-2217(97)00314-7
中图分类号
C93 [管理学];
学科分类号
12 ; 1201 ; 1202 ; 120202 ;
摘要
This paper studies the impact of using delivery time guarantees as a competitive strategy in service industries where demands are sensitive to both price and delivery time. We assume that delivery reliability is crucial, and investment in capacity expansion is plausible in order to maintain a high probability of delivering the time guarantee. A mathematical framework is proposed to understand the interrelations among pricing, delivery time guarantee and capacity expansion decisions. Specifically, an optimization model is developed to determine the joint optimal selection of these three important decision variables, with an objective of maximizing the average net profit, We characterize the optimal decisions and study their qualitative behaviors as various parameters change. We further present a numerical example to illustrate how the results of our model can be used to provide useful managerial insights for selecting the best competing strategies for firms with different operating characteristics. Our model and results are also applicable to a make-to-order manufacturing environment. (C) 1998 Elsevier Science B.V. All rights reserved.
引用
收藏
页码:28 / 49
页数:22
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