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| Author: | Iyer, A.V. Deshpande, V. Wu, Z. |
| Title: | A postponement model for demand management |
| Journal: | Management Science
2003 : AUG, VOL. 49:8, p. 983-1002 |
| Index terms: | Capacity Demand functions |
| Freeterms: | Postponement |
| Language: | eng |
| Abstract: | Demand postponement is analyzed as a strategy to handle potential demand surges. Under demand postponement, a fraction of the demands from the "regular" period are postponed and satisfied during a "postponement" period. This permits capacity to be procured to satisfy the postponed demands. A reimbursement per unit is paid to customers whose demands are postponed. The basic idea is that by preempting stockouts through demand postponement, overall stockout costs can be reduced. The authors formulate and solve a two-stage capacity planning problem under demand postponement. |
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