Modeling the role of retail price formats, and retailer competition types on production schedule strategy

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journalpeer-review

12 Scopus Citations
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Author(s)

  • Sanjoy Ghose
  • John J. Liu
  • Amit Bhatnagar
  • Hisashi Kurata

Detail(s)

Original languageEnglish
Pages (from-to)173-184
Journal / PublicationEuropean Journal of Operational Research
Volume164
Issue number1
Publication statusPublished - 1 Jul 2005
Externally publishedYes

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. © 2003 Elsevier B.V. All rights reserved.

Research Area(s)

  • Every day low pricing, High-low pricing, Make-to-order, Make-to-stock, Marketing/manufacturing interface

Citation Format(s)

Modeling the role of retail price formats, and retailer competition types on production schedule strategy. / Ghose, Sanjoy; Liu, John J.; Bhatnagar, Amit; Kurata, Hisashi.

In: European Journal of Operational Research, Vol. 164, No. 1, 01.07.2005, p. 173-184.

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journalpeer-review