Static and Dynamic Pricing of Excess Capacity in a Make-to-Order Environment

被引:23
|
作者
Hall, Joseph M. [1 ]
Kopalle, Praveen K. [1 ]
Pyke, David F. [2 ]
机构
[1] Dartmouth Coll, Tuck Sch Business, Hanover, NH 03755 USA
[2] Univ San Diego, Sch Business Adm, San Diego, CA 92110 USA
关键词
pricing; revenue management; make-to-order; queueing; dynamic control; PRODUCTION DECISIONS; INVENTORY DECISIONS; SERVICE FACILITY; DEMAND; COORDINATION; STRATEGIES; STABILITY; MODELS; SIZE;
D O I
10.1111/j.1937-5956.2009.01044.x
中图分类号
T [工业技术];
学科分类号
08 ;
摘要
We consider a make-to-order manufacturer that serves two customer classes: core customers who pay a fixed negotiated price, and "fill-in'' customers who make submittal decisions based on the current price set by the firm. Using a Markovian queueing model, we determine how much the firm can gain by explicitly accounting for the status of its production facility in making pricing decisions. Specifically, we examine three pricing policies: (1) static, state-independent pricing, (2) constant pricing up to a cutoff state, and (3) general state-dependent pricing. We determine properties of each policy, and illustrate numerically the financial gains that the firm can achieve by following each policy as compared with simpler policies. Our main result is that constant pricing up to a cutoff state can dramatically outperform a state-independent policy, while at the same time achieving most of the increase in revenue achievable from general state-dependent pricing. Thus, we find that constant pricing up to a cutoff state presents an attractive tradeoff between ease of implementation and revenue gain. When the costs of policy design and implementation are taken into account, this simple heuristic may actually out-perform general state-dependent pricing in some settings.
引用
收藏
页码:411 / 425
页数:15
相关论文
共 50 条
  • [1] Managing flexible capacity in a make-to-order environment
    Bish, EK
    Muriel, A
    Biller, S
    MANAGEMENT SCIENCE, 2005, 51 (02) : 167 - 180
  • [2] Enhancing Make-to-Order Manufacturing Agility: When Flexible Capacity Meets Dynamic Pricing
    Sun, Xu
    Chai, Shiwei
    Paul, Anand
    Zhu, Lingjiong
    PRODUCTION AND OPERATIONS MANAGEMENT, 2024, 33 (06) : 1354 - 1372
  • [3] Product offering, pricing, and make-to-stock/make-to-order decisions with shared capacity
    Dobson, G
    Yano, CA
    PRODUCTION AND OPERATIONS MANAGEMENT, 2002, 11 (03) : 293 - 312
  • [4] Dynamic pricing and lead-time policies for make-to-order systems
    Webster, S
    DECISION SCIENCES, 2002, 33 (04) : 579 - 599
  • [5] Selection of a dynamic supply portfolio in make-to-order environment with risks
    Sawik, Tadeusz
    COMPUTERS & OPERATIONS RESEARCH, 2011, 38 (04) : 782 - 796
  • [6] Capacity competition of make-to-order firms
    Chen, H
    Wan, YW
    OPERATIONS RESEARCH LETTERS, 2005, 33 (02) : 187 - 194
  • [7] Dynamic pricing and lead-time quotation for a multiclass make-to-order queue
    Celik, Sabri
    Maglaras, Costis
    MANAGEMENT SCIENCE, 2008, 54 (06) : 1132 - 1146
  • [8] Dynamic capacity reservation and due date quoting in a make-to-order system
    Pibernik, Richard
    Yadav, Prashant
    NAVAL RESEARCH LOGISTICS, 2008, 55 (07) : 593 - 611
  • [9] Revenue Management in a Make-to-Order Environment
    Rehkopf, Stefan
    Spengler, Thomas
    OPERATIONS RESEARCH PROCEEDINGS 2004, 2005, : 470 - 478
  • [10] The capacity planning problem in make-to-order enterprises
    Chen, Chin-Sheng
    Mestry, Siddharth
    Damodaran, Purushothaman
    Wang, Chao
    MATHEMATICAL AND COMPUTER MODELLING, 2009, 50 (9-10) : 1461 - 1473