Affiliation:
1. University of Electronic Science and Technology of China
Abstract
To MTO on-line manufacturers, one of the most popular time-based competitive strategies is to widely advertise a uniform delivery time guarantee to all the customers. While providing time guarantee can be an effective marketing approach, it is critical for firms to reduce lead time to keep the promise. Decreasing lot size in batching is one of the most important levers to compress lead time in operation. This research expands existing blanket delivery-time guarantee models by integrating operation approach and marketing approach. The online manufacturers guaranteed delivery time model with order batching is established. Some analytic results are provided, and numerical examples are conducted to provide further insight into the problem. The effects of batch processing setup cost, unit inventory holding cost and unit compression cost of transportation time are analyzed. The results indicate that when batch processing setup cost decrease, unit inventory holding cost or unit compression cost of transportation time increase, the online manufacturer should decrease the lot size and shorten the guaranteed delivery time. The customers time and price sensitivities have adverse influences on the manufacturers delivery time decision.
Publisher
Trans Tech Publications, Ltd.
Reference12 articles.
1. So, K.C., Song, J. -S.: Price, delivery time guarantees and capacity selection. European Journal of Operational Research, 1998, 111, 28—49.
2. Chandra P, Gupta S.: Managing Batch Processors to Reduce Lead Time in a Semiconductor Packaging Line. International Journal of Production Research, 1997, 35 (3): 611-633.
3. Magretta, J.: Fast, global and entrepreneurial: Supply chain management, Hong Kong style—an interview with Victor Fung. Harvard Business Review, 1998, 76 (5), 102—114.
4. Gupta, D., Weerawat, W.: Incentive mechanisms and supply chain design for quick response. Working Paper, Division of Industrial Engineering, Department of Mechanical Engineering, University of Minnesota, MN, December(2000).
5. Weng, Z.K.: Manufacturing lead times, system utilization rates and lead-time-related demands. European Journal of Operational Research, 1996, 89, 259—268.