Please use this identifier to cite or link to this item: http://hdl.handle.net/10397/9017
Title: Impact of introducing make-to-order options in a make-to-stock environment
Authors: Jiang, L 
Geunes, J
Keywords: Pricing
Supply chain management
Inventory
Marketing
Issue Date: 2006
Publisher: Elsevier
Source: European journal of operational research, 2006, v. 174, no. 2, p. 724-743 How to cite?
Journal: European journal of operational research 
Abstract: Firms engaged in consumer product sales often implement a strict make-to-stock approach, applying a single price to all customers. In such systems, customers can get the product at the given price upon availability on the shelf. However, consumers can often tolerate a delay between order placement and demand satisfaction under a price discount. Recognizing this phenomenon, a supplier may consider offering a menu of delivery-price options to consumers, where longer delay-time options imply lower prices. Demands from customers willing to wait provide advance demand information to the supplier. This paper studies strategies to exploit this additional information to improve profitability and service levels. Primarily assuming that delivery times are set exogenously, we determine optimal prices and stock levels under the new delayed demand satisfaction options. In addition, we develop analytical models to characterize the system performance gains under the new demand fulfillment option.
URI: http://hdl.handle.net/10397/9017
ISSN: 0377-2217
EISSN: 1872-6860
DOI: 10.1016/j.ejor.2004.11.026
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