Pricing and Lead Time Decisions in Decentralized Supply Chains

Liu, Liming; Parlar, Mahmut; Zhu, Stuart X.

doi:10.1287/mnsc.1060.0653

Cited by 161 publications

(85 citation statements)

References 20 publications

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“…However, they do not consider pricing decisions. A recent paper by Liu et al (2006) considers price and leadtime decisions in a two-firm setting; a supplier and a retailer within a supply chain, where the supplier also needs to choose the transfer price. In contrast to our focus on evaluating marketing as a revenue center and production as a cost center, they focus on the inefficiencies that result from the double marginalization in the supply chain.…”

Section: Literature Reviewmentioning

confidence: 99%

Coordination of marketing and production for price and leadtime decisions

2008

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We study a firm which serves customers that are sensitive to quoted price and leadtime, with pricing and leadtime decisions being made by the marketing and production departments, respectively. We analyze the inefficiencies created by the decentralization of the price and leadtime decisions. In the decentralized setting, the total demand generated is larger, leadtimes are longer, quoted prices are lower, and the firm's profits are lower as compared to the centralized setting. We show that coordination can be achieved using a transfer price contract with bonus payments. We also provide insights on the sensitivity of the optimal decisions with respect to market characteristics, sequence of decisions and the firm's capacity level.

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Section: Literature Reviewmentioning

confidence: 99%

Coordination of marketing and production for price and leadtime decisions

2008

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“…The negotiation of price-lead time combinations is also related to the literature on pricing and lead time quotation. This literature often assumes that the buyer's order quantity is a function of the price and lead time quoted by the supplier and thus focuses on the supplier's optimal price-lead time decision (Palaka et al 1998, Liu et al 2007). We, in contrast, take the buyer's perspective and give him a decisionsupport tool that he can use while negotiating the price and lead time with his supplier.…”

Section: Literature Reviewmentioning

confidence: 99%

Capacity Planning in the Semiconductor Industry: Dual-Mode Procurement with Options

Chen

Erhun

Hertzler

et al. 2012

M&SOM

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T o help a firm reduce inefficiencies associated with equipment capacity planning, we propose a dual-mode equipment procurement (DMEP) framework. DMEP combines dual-source (i.e., a less-expensive-but-slower base mode and a faster-but-more-expensive flexible mode) procurement with option contracts in three layers: a contract negotiation layer, where the firm chooses the best combination of lead time and price for each mode from the supply contract menu; a capacity reservation layer, where the firm reserves total equipment procurement quantities from the two supply modes before the planning horizon starts; and an execution layer, where the firm orders equipment from the two supply modes based on the updated demand information. We first investigate the execution layer as a dynamic dual-source capacity expansion problem with demand backlogging and demonstrate that the optimal policy lacks structure even under the simplest setting. Thus, we propose a heuristic solution for the execution-layer problem, which also serves as a building block for the other two layers. Through numerical analysis, we quantify the value of the added flexibility of DMEP for the firm. The DMEP framework has been implemented at Intel Corporation and has resulted in savings of tens of millions of dollars for one process technology.

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“…In the MTO environments, delivery time affects the customers' satisfaction and acts as a mean to attract the market demands (Xiao et al 2009). A customer's order is affected not only by the delivery time; but also, by the offered price (Liu et al 2007;Xiao et al 2011;Huang et al 2013). To the best of our knowledge, a few works have focused on both needs of the MTO manufacturers mentioned above.…”

Section: Introductionmentioning

confidence: 99%

Integrated model for pricing, delivery time setting, and scheduling in make-to-order environments

2017

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Usually, in make-to-order environments which work only in response to the customer's orders, manufacturers for maximizing the profits should offer the best price and delivery time for an order considering the existing capacity and the customer's sensitivity to both the factors. In this paper, an integrated approach for pricing, delivery time setting and scheduling of new arrival orders are proposed based on the existing capacity and accepted orders in system. In the problem, the acquired market demands dependent on the price and delivery time of both the manufacturer and its competitors. A mixed-integer nonlinear programming model is presented for the problem. After converting to a pure non-linear model, it is validated through a case study. The efficiency of proposed model is confirmed by comparing it to both the literature and the current practice. Finally, sensitivity analysis for the key parameters is carried out.

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Pricing and Lead Time Decisions in Decentralized Supply Chains

Cited by 161 publications

References 20 publications

Coordination of marketing and production for price and leadtime decisions

Coordination of marketing and production for price and leadtime decisions

Capacity Planning in the Semiconductor Industry: Dual-Mode Procurement with Options

Integrated model for pricing, delivery time setting, and scheduling in make-to-order environments

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