Department of Economics and Business Economics

Capacity Optimization and Competition with Cyclical and Lead-Time-Dependent Demands

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Capacity Optimization and Competition with Cyclical and Lead-Time-Dependent Demands. / Li, Hongyan Jenny; Meissner, Joern .

In: Annals of Operations Research, Vol. 271, No. 2, 2018, p. 737-763.

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Li, Hongyan Jenny ; Meissner, Joern . / Capacity Optimization and Competition with Cyclical and Lead-Time-Dependent Demands. In: Annals of Operations Research. 2018 ; Vol. 271, No. 2. pp. 737-763.

Bibtex

@article{894beb82efe24173839b37ecd519dd84,
title = "Capacity Optimization and Competition with Cyclical and Lead-Time-Dependent Demands",
abstract = "Capacity acquisition is often capital- and time-consuming for a business, and capacity investment is often partially or fully irreversible and difficult to change in the short term. Moreover, capacity determines the action space for service/production scheduling and lead-time quotation decisions. The quoted lead-time affects the customer’s perceived service quality. Thus, capacity acquisition level and lead-time quotation affect a firm’s revenue/profit directly or indirectly. In this paper, we investigate a joint optimization problem of capacity acquisition, delivery lead-time quotation and service-production scheduling with cyclical and lead-time-dependent demands. We first explore the structural properties of the optimal schedule given any capacity and lead-time. Then, the piecewise concave relationship between the delay penalty cost and the capacity acquisition level is found. Thereby, an efficient and effective polynomial time algorithm is provided to determine the optimal capacity acquisition level, delivery lead-time quotation and service/production schedule simultaneously. Furthermore, a capacity competition game among multiple firms is addressed. The numerical studies show that capacity equilibrium often exists and converges to a unique solution.",
keywords = "Capacity optimization, Competition, Cyclical demands, DATE, DECISIONS, Lead-time quotation, MANAGEMENT, Optimization algorithm, PRICE, QUOTATION, SERVICE CAPACITY, Scheduling",
author = "Li, {Hongyan Jenny} and Joern Meissner",
year = "2018",
doi = "10.1007/s10479-018-2773-7",
language = "English",
volume = "271",
pages = "737--763",
journal = "Annals of Operations Research",
issn = "0254-5330",
publisher = "Springer New York LLC",
number = "2",

}

RIS

TY - JOUR

T1 - Capacity Optimization and Competition with Cyclical and Lead-Time-Dependent Demands

AU - Li, Hongyan Jenny

AU - Meissner, Joern

PY - 2018

Y1 - 2018

N2 - Capacity acquisition is often capital- and time-consuming for a business, and capacity investment is often partially or fully irreversible and difficult to change in the short term. Moreover, capacity determines the action space for service/production scheduling and lead-time quotation decisions. The quoted lead-time affects the customer’s perceived service quality. Thus, capacity acquisition level and lead-time quotation affect a firm’s revenue/profit directly or indirectly. In this paper, we investigate a joint optimization problem of capacity acquisition, delivery lead-time quotation and service-production scheduling with cyclical and lead-time-dependent demands. We first explore the structural properties of the optimal schedule given any capacity and lead-time. Then, the piecewise concave relationship between the delay penalty cost and the capacity acquisition level is found. Thereby, an efficient and effective polynomial time algorithm is provided to determine the optimal capacity acquisition level, delivery lead-time quotation and service/production schedule simultaneously. Furthermore, a capacity competition game among multiple firms is addressed. The numerical studies show that capacity equilibrium often exists and converges to a unique solution.

AB - Capacity acquisition is often capital- and time-consuming for a business, and capacity investment is often partially or fully irreversible and difficult to change in the short term. Moreover, capacity determines the action space for service/production scheduling and lead-time quotation decisions. The quoted lead-time affects the customer’s perceived service quality. Thus, capacity acquisition level and lead-time quotation affect a firm’s revenue/profit directly or indirectly. In this paper, we investigate a joint optimization problem of capacity acquisition, delivery lead-time quotation and service-production scheduling with cyclical and lead-time-dependent demands. We first explore the structural properties of the optimal schedule given any capacity and lead-time. Then, the piecewise concave relationship between the delay penalty cost and the capacity acquisition level is found. Thereby, an efficient and effective polynomial time algorithm is provided to determine the optimal capacity acquisition level, delivery lead-time quotation and service/production schedule simultaneously. Furthermore, a capacity competition game among multiple firms is addressed. The numerical studies show that capacity equilibrium often exists and converges to a unique solution.

KW - Capacity optimization

KW - Competition

KW - Cyclical demands

KW - DATE

KW - DECISIONS

KW - Lead-time quotation

KW - MANAGEMENT

KW - Optimization algorithm

KW - PRICE

KW - QUOTATION

KW - SERVICE CAPACITY

KW - Scheduling

UR - http://www.scopus.com/inward/record.url?scp=85041120989&partnerID=8YFLogxK

U2 - 10.1007/s10479-018-2773-7

DO - 10.1007/s10479-018-2773-7

M3 - Journal article

VL - 271

SP - 737

EP - 763

JO - Annals of Operations Research

JF - Annals of Operations Research

SN - 0254-5330

IS - 2

ER -