The application of reliability constrained stochastic capacity planning models to the service sector

Emphasis on quality management has recently permeated not only the manufacturing sector, but the service sector as well. Consequently, quality service and consumer satisfaction have become realities for many monopolistic service oriented industries facing competition. In order to effectively implement timely service within these industries (i) capacity plans must be developed which provide adequate staffing during both peakload and offpeak hours, as well as optimal (ii) prices and (iii) reliability of service. This paper builds on the results of Boronico (1992) in illustrating how reliability constrained marginal cost, within which optimal price is embodied, and minimum cost capacity plans may be determined for a service provider facing stochastic demand. Excess demand is not lost, but is deferred: a characteristic that typifies the operation of many delivery systems, such as postal services. Results indicate that marginal costs are convex with respect to reliability of service, while changes in the demand distribution's variability may impact optimal capacity by either increasing or decreasing required capacity.     

Planning and approximation models for delivery route based services with price-sensitive demands

Classical vehicle routing problems typically do not consider the impact of delivery price on the demand for delivery services. Existing models seek the minimum sum of tour lengths in order to serve the demands of a given set of customers. This paper proposes approximation models to estimate the impacts of price on delivery services when demand for delivery service is price dependent. Such models can serve as useful tools in the planning phase for delivery service providers and can assist in understanding the economics of delivery services. These models seek to maximize profit from delivery service, where price determines demand for deliveries as well as the total revenue generated by satisfying demand. We consider a variant of the model in which each customer’s delivery volume is price sensitive, as well as the case in which customer delivery volumes are fixed, but the total number of customers who select the delivery service provider is price sensitive. A third model variant allows the delivery service provider to select a subset of delivery requests at the offered price in order to maximize profit.     

Optimal pricing,EOL (end of life) warranty,and spare parts manufacturing strategy amid product transition

We study firm’s strategy to determine its product price and warranty period, and plan the spare parts manufacturing so as to maximize its profit and at the same time to fulfill its commitment to providing the customer with the key part continuously over the relevant decision time horizon, i.e., the product’s life cycle plus its EOL service (warranty) period. To examine the research question, we develop and solve a two-stage optimal control theory model. From the numerical analysis, we infer as follows. It is not always true that the longer the EOL warranty period, the better for the company’s profitability, implying there exists an optimal EOL warranty period that balances all the relevant forces like market demand and cost structures. The relationship between optimal EOL warranty period and failure rate (defect rate) is concave: when the defect rate is moderate, the company has to increase its EOL warranty period as the defect rate increases so as to compensate for the deteriorating quality; but, when the defect rate is beyond a threshold level, the company needs to curtail its EOL warranty commitment as the defect rate increases in order to avoid excessive cost to service the failed parts. By depicting key dynamics in this managerial problem, this paper sheds light on how to make decision for optimal pricing and warranty when the product life cycle is finite and the company is obliged to provide after-sales services to customers for an extended period of time after the current product is no longer produced.     

Staffing decisions for heterogeneous workers with turnover

In this paper we consider a firm that employs heterogeneous workers to meet demand for its product or service. Workers differ in their skills, speed, and/or quality, and they randomly leave, or turn over. Each period the firm must decide how many workers of each type to hire or fire in order to meet randomly changing demand forecasts at minimal expense. When the number of workers of each type can by continuously varied, the operational cost is jointly convex in the number of workers of each type, hiring and firing costs are linear, and a random fraction of workers of each type leave in each period, the optimal policy has a simple hire- up-to/fire-down-to structure. However, under the more realistic assumption that the number of workers of each type is discrete, the optimal policy is much more difficult to characterize, and depends on the particular notion of discrete convexity used for the cost function. We explore several different notions of discrete convexity and their impact on structural results for the optimal policy.     

Fuzzy pricing,marketing and service planning in a fuzzy inventory model: A geometric programming approach

In the real world markets, demand is influenced by different parameters. Recently, many researchers have been interested in integrated production and marketing planning strategies in inventory models where demand depends on different parameters such as price and/or marketing expenditure. The quality of services that are offered to customers of a product is one of the most important parameters that affects demand in the real markets and has not been considered in development of inventory models. On the other hand, the cost parameters in real inventory systems and other parameters such as price, marketing and service elasticity to demand are imprecise and uncertain in nature. So, the notion of fuzziness can be applied to cope with this uncertainty. In this paper, a new fuzzy profit maximization inventory model with shortages is proposed. The demand is considered as a power function of price, marketing expenditure and service expenditure. Furthermore, unit cost is determined as a power function of order quantity. Since the proposed model is in a fuzzy environment, a fuzzy decision should be made to meet the decision criteria, and the results should be fuzzy. Therefore, the proposed model is formulated and solved using geometric programming and fuzzy optimization techniques to derive an approximation of the results’ membership functions. The model is illustrated with a numerical example and finally a case study is provided for evaluation and validation of the results of model.     

随机需求下物流服务供应链订购策略研究

针对由单个物流服务提供商和集成商组成的物流服务供应链,基于集中化模式、纳什博弈模式和Stackelberg博弈模式三种典型模式,考虑市场需求随机且受服务质量缺陷承诺水平的影响,探讨物流服务供应链的订购与质量缺陷承诺策略问题。通过分析发现:物流服务质量缺陷承诺水平随着市场需求弹性系数的增加而递减,但其受物流服务集成商观测水平的影响却因合作模式不同而变化不一致;集中化模式下的物流服务订购量随着物流服务集成商观测水平或市场需求弹性系数的增大而递减,但在其他两种合作模式下物流服务订购量随着物流服务集成商观测水平或市场需求弹性系数的增加而增加;在三种模式下,物流服务供应链的整体利润随着市场需求弹性系数的增加而递减,但其受物流服务集成商观测水平的影响却因合作模式不同而变化不一致。     

Coordination of staffing and pricing decisions in a service firm

Customer demand is sensitive to the price paid for the service in many service environments. Using queueing theory framework, we develop profit maximization models for jointly determining the price and the staffing level in a service company. The models include constraints on the average waiting time and the blocking probability. We show convexity of the single‐variable subproblem under certain plausible assumptions on the demand and staffing cost functions. Using numerical examples, we investigate the sensitivity of the price and the staffing level to changes in the marginal service cost and the user‐specified constraint on the congestion measure. Copyright © 2008 John Wiley & Sons, Ltd.     

基于电子商务平台的服务模式选择研究

随着电子商务的迅猛发展,提供优质的服务已成为电商企业获取竞争优势的主要手段。本文重点探究了电商平台与零售商之间服务模式的策略性选择问题。本文通过建立理论模型,量化比较四个服务模式即A模式(零售商承担服务)、B 模式(零售商将服务外包给第三方)、C模式(平台承担服务)和D模式(平台将服务外包给第三方)的特点得出最优决策。研究得到如下结论:在成本结构相同的情况下,C模式具有最高的服务水平和市场利润,而A模式和B模式能为顾客提供最低的市场价格。平台和供应商更倾向于自己来提供服务,分散的服务模式会降低服务水平,但当商家自身服务成本较高时,他们更愿意让另一方或较低服务成本的第三方作为服务提供方。另外,本文还发现在A模式和B模式下,平台收取的佣金比例随着需求对服务的敏感程度的增加而降低,而C模式和D模式则相反。     

Dynamic pricing,product and process innovation

The question of simultaneous dynamic pricing, product and process investment policies is crucial for manufacturing and high-tech industries. This paper models these policies in an optimal control setting. On the supply side, the firm sets prices, product and process investment levels over time. On the demand side, current demand depends on price and quality. Under an additive separable demand function, dynamic pricing increases with quality and cost. Therefore, both product innovation and process innovation impact the pricing policy. Under a multiplicative separable demand function, dynamic pricing policy follows the dynamic of production cost and is independent of the evolution of product quality. Thus, process innovation is the main determinant of a firm’s pricing policy over time and product innovation has no impact.     

Optimizing capacity,pricing and location decisions on a congested network with balking

In this paper, we consider the problem of making simultaneous decisions on the location, service rate (capacity) and the price of providing service for facilities on a network. We assume that the demand for service from each node of the network follows a Poisson process. The demand is assumed to depend on both price and distance. All facilities are assumed to charge the same price and customers wishing to obtain service choose a facility according to a Multinomial Logit function. Upon arrival to a facility, customers may join the system after observing the number of people in the queue. Service time at each facility is assumed to be exponentially distributed. We first present several structural results. Then, we propose an algorithm to obtain the optimal service rate and an approximate optimal price at each facility. We also develop a heuristic algorithm to find the locations of the facilities based on the tabu search method. We demonstrate the efficiency of the algorithms numerically.     

Product balancing under conditions of quality inflation,cost pressures and growth strategies

This paper analyzes an organization that has a well-defined strategy providing a sustainable competitive advantage. This advantage is expressed by at least one dimension of quality on which the product or service exhibits outstanding performance. Using decreasing and increasing exponential demand functions for price and quality, respectively, the optimal quality level is characterized when dollar sales volume (under a cost-based price floor) and profit are maximized. However, as quality inflates, the same quality performance is worth less tomorrow than today. This paper shows that continuous and simultaneous improvement of operational efficiency and quality is a must and is independent from price setting policies. The condition of optimal trade-offs among quality dimensions is found for the case when the company competes on multiple quality dimensions. Finally, the conditions are analyzed when the resources of quality are utilized in other market segments as well. It is found that the corporate level quality (or the utilization level of resources) is lower (higher) than the highest (least) individual business unit (product) quality.     

A joint optimal pricing,rebate value,and lot sizing model

Delayed incentives in the form of mail-in cash rebates are very popular among manufacturers, and more recently, among retailers. One of the main advantages of rebates is that while they increase demand, a small proportion of consumers redeem them. In this paper, we formulate and solve models for jointly determining the optimal price, rebate face value, and the optimal order quantity for a price and rebate sensitive deterministic demand. The models show that under realistic conditions, offering rebates can have significant pricing and inventory policy implications and can lead to a significant increase in profit.     

退款保证对竞争供应链的影响:基于顾客退货行为视角

为研究退款保证对竞争供应链的影响,从顾客退货行为视角构建消费者效用函数,建立竞争制造商与在线零售商之间的博弈模型,分析退款保证对供应链均衡的影响。研究发现:高质量产品的批发价格和零售价格总是更高,但高质量产品制造商可能并不能获得更多利润;退款保证会影响消费者的产品购买选择,对低质量产品需求有利。然而,从利润最大化的角度,在线零售商只有在退货损失足够低时,才会有动机提供退款保证,而退款保证对制造商利润的影响取决于退货产品残值。     

产品服务能力与定价联合优化策略机制研究——基于动态性和非线性视角

为了快速响应客户需求的动态变化和提高产品服务能力的管理效率,运用状态相关需求率函数和成本收益率函数,建立用以解决产品服务需求动态性和非线性难题的排队优化模型。通过考虑产品服务化过程中客户需求变化特征,从服务能力和价格两个维度将客户划分为实惠型、经济型、专业型和品质型四个不同类别。依据客户产品服务需求动态演变阶段,针对服务能力与价格的内在关联性,运用排队优化模型分别构建了成本领先策略、服务能力领先策略、价格领先策略和产品服务能力定价联合策略。最后,借助南阳泵业企业运营实例,验证了产品服务能力定价联合策略的优越性,并给出产品服务能力定价联合策略演化路径及其实施对策。     

Optimizing pricing and location decisions for competitive service facilities charging uniform price

In this paper, we present the problem of optimizing the location and pricing for a set of new service facilities entering a competitive marketplace. We assume that the new facilities must charge the same (uniform) price and the objective is to optimize the overall profit for the new facilities. Demand for service is assumed to be concentrated at discrete demand points (customer markets); customers in each market patronize the facility providing the highest utility. Customer demand function is assumed to be elastic; the demand is affected by the price, facility attractiveness, and the travel cost for the highest-utility facility. We provide both structural and algorithmic results, as well as some managerial insights for this problem. We show that the optimal price can be selected from a certain finite set of values that can be computed in advance; this fact is used to develop an efficient mathematical programming formulation for our model.     

Resource,service quality and performance triad: a framework for measuring efficiency of banking services

In this paper, we present the development of a theoretical framework for measuring the efficiency of banking services taking into account physical and human resources, service quality and performance. Expenditures on quality improvement efforts and the impact of service quality on financial outcomes have long intrigued researchers. Banks have traditionally focused on how to transform their physical resources to generate financial performance, and they inadvertently ignored the mediating intangible factor of service quality. A theoretical framework on the optimization triad of resource, service quality and performance is proposed here, thereby linking the marketing variables to the financial metrics. A measure for the return on quality is developed as the ratio of the potential improvements in financial performance by enhancement of service quality to the observed performance figures. Empirical results obtained from a study of 27 Indian public sector banks and their customers allow us to measure the impact of service quality on financial performance, optimal level of service quality that can be generated using existing resources and the opportunity cost for sub-optimal service delivery. Banks delivering better service are shown to have better transformation of resource to performance using superior service delivery as the medium. Our results confirm the linkage between resource, service quality and performance for services.     

Price markdown scheme in a multi-echelon supply chain in a high-tech industry

This paper studies the price markdown scheme in a supply chain that consists of a supplier, a contract manufacturer (CM), and a buyer (retailer). The buyer subcontracts the production of the final product to the CM. The CM buys the components from the supplier and charges the buyer a service fee for the final product produced. The price markdown is made possible by the supplier with the development of new manufacturing technologies that reduce the production cost for the sourced component. Consequently, the buyer adjusts the retail price in order to possibly stimulate stronger demand that may benefit both the supplier and the buyer. Under this scenario, we identify the optimal discount pricing strategies, capacity reservation, and the stocking policies for the supplier and the buyer. We also investigate the optimal inventory decision for the CM to cope with the price discount by considering both demand and delivery uncertainties. Our results suggest that higher production cost accelerates the effects of higher price sensitivity on lowering the optimal capacity and stocking policies in the supply chain. The effect of mean demand error on the optimal prices is relatively marginal compared with that from price sensitivity. We also found that increasing the standard deviation of the random demand does not necessarily increase the stocking level as one would predict. The results show that delivery uncertainty plays an important role in the inventory carried beyond the price break. We discuss potential extensions for future research.     

Optimal inventory replenishment policy for a queueing system with finite waiting room capacity

We treat an inventory control problem in a facility that provides a single type of service for customers. Items used in service are supplied by an outside supplier. To incorporate lost sales due to service delay into the inventory control, we model a queueing system with finite waiting room and non-instantaneous replenishment process and examine the impact of finite buffer on replenishment policies. Employing a Markov decision process theory, we characterize the optimal replenishment policy as a monotonic threshold function of reorder point under the discounted cost criterion. We present a simple procedure that jointly finds optimal buffer size and order quantity.     

考虑供应商服务与零售商退货的定价博弈分析

研究由一个供应商和一个零售商组成的二级供应链,由供应商提供产品服务,零售商制定产品零售价,在一个销售周期结束后存在零售商向供应商的退货,退货产生的物流成本由零售商与供应商通过博弈的方式共同分担.基于博弈理论,建立了供应商和零售商以各自利润最大化为目标,以服务水平、零售价和退货为主要影响因素的Nash和Stackelberg博弈.采用数值方法,对这两个博弈进行了求解.得到供应商为零售商分担退货物流成本最优比例、供应商最优服务水平和零售商最优定价策略.研究表明,Nash博弈时的解是唯一的,此时供应商不会分担退货物流成本;Stackelberg博弈时,供应商分担退货物流成本比例依据批发价大小而定.     

Coordination of pricing and multi-period production for constant priced goods

This paper addresses the problem of jointly determining a single price and production schedule for a product with seasonal demand. Under the assumption that the ratio of the demands in any two periods does not depend upon the price at which the product is offered, we develop a procedure that guarantees an optimal solution. Perhaps more importantly, however, our model provides insight into the manner in which the firm's production cost increases with the intensity of total demand.