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| Author: | Ray, S. Jewkes, E.M. |
| Title: | Customer lead time management when both demand and price are lead time sensitive |
| Journal: | European Journal of Operational Research
2004 : MAR, VOL. 153:3, p. 769-781 |
| Index terms: | Distribution Prices Economies of scale Investment analysis Capacity |
| Language: | eng |
| Abstract: | In this paper the authors model an operating system consisting of a firm and its customers, where the mean demand rate is a function of the guaranteed delivery time offered to the customers and of market price, where price itself is determined by the length of the delivery time. The authors show that it is imperative for managers to know whether customers are price or lead time sensitive based on the simultaneous dependence of price and demand on delivery time before selecting a time-based competitive strategy. The optimal policy is investigated and managerial insights provided. |
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