The Study of MTO Online Manufacturers' Guaranteed Delivery Time Model with Order Batching

Abstract:

To MTO on-line manufacturers, one of the most popular time-based competitive strategies is to widely advertise a uniform delivery time guarantee to all the customers. While providing time guarantee can be an effective marketing approach, it is critical for firms to reduce lead time to keep the promise. Decreasing lot size in batching is one of the most important levers to compress lead time in operation. This research expands existing blanket delivery-time guarantee models by integrating operation approach and marketing approach. The online manufacturers guaranteed delivery time model with order batching is established. Some analytic results are provided, and numerical examples are conducted to provide further insight into the problem. The effects of batch processing setup cost, unit inventory holding cost and unit compression cost of transportation time are analyzed. The results indicate that when batch processing setup cost decrease, unit inventory holding cost or unit compression cost of transportation time increase, the online manufacturer should decrease the lot size and shorten the guaranteed delivery time. The customers time and price sensitivities have adverse influences on the manufacturers delivery time decision.

• Periodical: Advanced Materials Research (Volume 933)
• Pages: 824-829
• DOI: https://doi.org/10.4028/www.scientific.net/AMR.933.824
• Online since: May 2014
• Authors: Qiang Gang Zhu*, Lei Liu, Yun Sheng Wang
• Keywords: Guaranteed Delivery Time, Lot Size, Online Manufacturer

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