Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
9663844 | European Journal of Operational Research | 2005 | 12 Pages |
Abstract
To study the determinants of choice between make-to-order (MTO) and make-to-stock (MTS), production scientists have traditionally focused on production-specific factors. However, the choice can be also influenced by marketing-specific factors such as the pricing strategy of retailers. This paper, therefore, develops a modeling framework to link the determination of the optimal production strategy of MTS-MTO to the retailing strategy of EDLP-HiLo. We characterize an optimal production strategy as one that maximizes total system wide profits in a centralized system. We show that the optimum production strategy would depend on whether the manufacturer is delivering to an every day low pricing (EDLP) store or to a high low pricing store (Hi-Lo). Additionally, the production plan is demonstrated to be a function of the nature and type of competition in the market. In particular, we study the duopoly model of competition, under both Bertrand and Stackelberg conjectures.
Related Topics
Physical Sciences and Engineering
Computer Science
Computer Science (General)
Authors
Sanjoy Ghose, John J. Liu, Amit Bhatnagar, Hisashi Kurata,