Price, delivery time guarantees and capacity selection
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 p...
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| Veröffentlicht in: | European journal of operational research 1998-11, Vol.111 (1), p.28-49 |
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| container_title | European journal of operational research |
| container_volume | 111 |
| creator | So, Kut C. Song, Jing-Sheng |
| description | 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. |
| doi_str_mv | 10.1016/S0377-2217(97)00314-7 |
| format | Article |
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Management science</subject><subject>Operations research</subject><subject>Quality of service</subject><subject>Queuing theory</subject><subject>Service guarantees</subject><subject>Service industries</subject><subject>Service quality</subject><subject>Studies</subject><subject>Time-based competition</subject><issn>0377-2217</issn><issn>1872-6860</issn><fulltext>true</fulltext><rsrctype>article</rsrctype><creationdate>1998</creationdate><recordtype>article</recordtype><sourceid>X2L</sourceid><recordid>eNqFkEFr3DAQhUVooNtNfkLBlB4aiBONJFv2qYQlaQOBBJqchTIapVp2bVfyLvjfV86G9FjBaObw3ujpY-wz8AvgUF_-4lLrUgjQ31p9xrkEVeojtoBGi7Juav6BLd4lH9mnlNacc6igWrD6IQak88LRJuwpTsUYtlS87Gy03UiUCtu5Au1gMYxTkWhDOIa-O2HH3m4Snb71JXu6uX5c_Szv7n_crq7uSqxEM5aN46g1tK7ysvbOOcSGnit0zoOqRc15rRC81C4LQXkvrQDf2MopJVBKuWRfDnuH2P_ZURrNut_FLj9pBFcgFYhZVB1EGPuUInkzxLC1cTLAzUzIvBIy8_dNq80rIaOz7_bgizQQvpson3UfKZm9kRYA8j3NU9s2uYV5zDXkEo1Rrfk9bvOur29BbUK78RkfhvQviM7A2znq94OMMrR9oGgSBuqQXIiZrHF9-E_ovxzNkmw</recordid><startdate>19981116</startdate><enddate>19981116</enddate><creator>So, Kut C.</creator><creator>Song, Jing-Sheng</creator><general>Elsevier B.V</general><general>Elsevier</general><general>Elsevier Sequoia S.A</general><scope>IQODW</scope><scope>DKI</scope><scope>X2L</scope><scope>AAYXX</scope><scope>CITATION</scope><scope>7SC</scope><scope>7TB</scope><scope>8FD</scope><scope>FR3</scope><scope>JQ2</scope><scope>L7M</scope><scope>L~C</scope><scope>L~D</scope></search><sort><creationdate>19981116</creationdate><title>Price, delivery time guarantees and capacity selection</title><author>So, Kut C. ; Song, Jing-Sheng</author></sort><facets><frbrtype>5</frbrtype><frbrgroupid>cdi_FETCH-LOGICAL-c528t-8d0c7719d5f36fdddcc8eb5cddf146260064c1f37dd0c14ff3a21f8a5d442c333</frbrgroupid><rsrctype>articles</rsrctype><prefilter>articles</prefilter><language>eng</language><creationdate>1998</creationdate><topic>Applied sciences</topic><topic>Capacity</topic><topic>Capacity planning</topic><topic>Competition</topic><topic>Deliveries</topic><topic>Exact sciences and technology</topic><topic>Firm modelling</topic><topic>Guarantees</topic><topic>Mathematical models</topic><topic>Operational research and scientific management</topic><topic>Operational research. Management science</topic><topic>Operations research</topic><topic>Quality of service</topic><topic>Queuing theory</topic><topic>Service guarantees</topic><topic>Service industries</topic><topic>Service quality</topic><topic>Studies</topic><topic>Time-based competition</topic><toplevel>peer_reviewed</toplevel><toplevel>online_resources</toplevel><creatorcontrib>So, Kut C.</creatorcontrib><creatorcontrib>Song, Jing-Sheng</creatorcontrib><collection>Pascal-Francis</collection><collection>RePEc IDEAS</collection><collection>RePEc</collection><collection>CrossRef</collection><collection>Computer and Information Systems Abstracts</collection><collection>Mechanical & Transportation Engineering Abstracts</collection><collection>Technology Research Database</collection><collection>Engineering Research Database</collection><collection>ProQuest Computer Science Collection</collection><collection>Advanced Technologies Database with Aerospace</collection><collection>Computer and Information Systems Abstracts Academic</collection><collection>Computer and Information Systems Abstracts Professional</collection><jtitle>European journal of operational research</jtitle></facets><delivery><delcategory>Remote Search Resource</delcategory><fulltext>fulltext</fulltext></delivery><addata><au>So, Kut C.</au><au>Song, Jing-Sheng</au><format>journal</format><genre>article</genre><ristype>JOUR</ristype><atitle>Price, delivery time guarantees and capacity selection</atitle><jtitle>European journal of operational research</jtitle><date>1998-11-16</date><risdate>1998</risdate><volume>111</volume><issue>1</issue><spage>28</spage><epage>49</epage><pages>28-49</pages><issn>0377-2217</issn><eissn>1872-6860</eissn><coden>EJORDT</coden><abstract>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. 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| fulltext | fulltext |
| identifier | ISSN: 0377-2217 |
| ispartof | European journal of operational research, 1998-11, Vol.111 (1), p.28-49 |
| issn | 0377-2217 1872-6860 |
| language | eng |
| recordid | cdi_proquest_journals_204134123 |
| source | RePEc; Access via ScienceDirect (Elsevier) |
| subjects | Applied sciences Capacity Capacity planning Competition Deliveries Exact sciences and technology Firm modelling Guarantees Mathematical models Operational research and scientific management Operational research. Management science Operations research Quality of service Queuing theory Service guarantees Service industries Service quality Studies Time-based competition |
| title | Price, delivery time guarantees and capacity selection |
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