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Title of Journal: Int J Adv Manuf Technol

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Abbravation: The International Journal of Advanced Manufacturing Technology

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Springer-Verlag

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DOI

10.1007/s001150101155

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1433-3015

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Price delivery time and capacity decisions in an

Authors: E Teimoury M Modarres A Kazeruni Monfared M Fathi
Publish Date: 2011/04/15
Volume: 57, Issue: 1-4, Pages: 235-244
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Abstract

Speed and price are the two most important factors in customer satisfaction and business success in today’s competitive environment Timebased product differentiation and segment pricing have provided firms with a great opportunity to profit enhancement This paper presents a coding system for pricing/queuing models in the literature In this article a service/maketoorder firm with heterogeneous price and delivery timesensitive customers as an M/M/1 queuing system is analyzed The firm uses customers’ heterogeneity to create market segments Products offered to each segment differ only in price and delivery time The objective of this profitmaximizing firm is to determine optimal price delivery time and capacity for different market segments Moreover solving this problem can help to strategic decision making about supply chain decoupling point An approach based on uniformization and matrix geometric method so as to calculate the distribution of lowpriority customers’ time in system is developed Then the proposed pricing/queuing model is implemented by a numerical study and firm’s optimal decisions under shared and dedicated capacity strategies are analyzed and the effect of capacity costs and product substitution is studied Finally we have shown how firm’s decisions are influenced by market characteristics capacity costs and operational strategies

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