Delivery‐date and capacity management in a decentralized internal market |
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| Authors: | Murat Erkoc S David Wu Haresh Gurnani |
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| Institution: | 1. Department of Industrial Engineering, College of Engineering, University of Miami, Coral Gables, Florida 33124;2. Department of Industrial and Systems Engineering, P.C. Rossin College of Engineering, Lehigh University, Bethlehem, Pennsylvania 18015;3. Department of Management, School of Business, University of Miami, Coral Gables, Florida 33124 |
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| Abstract: | We study competitive due‐date and capacity management between the marketing and engineering divisions within an engineer‐to‐order (ETO) firm. Marketing interacts directly with the customers and quotes due‐dates for their orders. Engineering is primarily concerned with the efficient utilization of resources and is willing to increase capacity if the cost is compensated. The two divisions share the responsibility for timely delivery of the jobs. We model the interaction between marketing and engineering as a Nash game and investigate the effect of internal competition on the equilibrium decisions. We observe that the internal competition not only degrades the firm's overall profitability but also the serviceability. Finally, we extend our analysis to multiple‐job settings that consider both flexible and inflexible capacity. © 2008 Wiley Periodicals, Inc. Naval Research Logistics, 2008 |
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| Keywords: | supermodular games due‐date quotation tardiness serviceability marketing/manufacturing interface |
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