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

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

0.00 Avg rating0 Votes
Article ID: iaor20061632
Country: Netherlands
Volume: 164
Issue: 1
Start Page Number: 173
End Page Number: 184
Publication Date: Jul 2005
Journal: European Journal of Operational Research
Authors: , , ,
Keywords: marketing
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.

Reviews

Required fields are marked *. Your email address will not be published.