TY - JOUR
T1 - Coordination of marketing and production for price and leadtime decisions
AU - Pekgün, Pelin
AU - Griffin, Paul
AU - Keskinocak, Pinar
N1 - Funding Information:
This research is partially supported by NSF CAREER award DMI-0093844 and NSF grant DMI-0400301. We are grateful to the referees and the department editor Sampath Rajagopalan for their constructive feedback, which significantly improved the content and the presentation of this paper.
Copyright:
Copyright 2008 Elsevier B.V., All rights reserved.
PY - 2008/1
Y1 - 2008/1
N2 - We study a firm which serves customers that are sensitive to quoted price and leadtime, with pricing and leadtime decisions being made by the marketing and production departments, respectively. We analyze the inefficiencies created by the decentralization of the price and leadtime decisions. In the decentralized setting, the total demand generated is larger, leadtimes are longer, quoted prices are lower, and the firm's profits are lower as compared to the centralized setting. We show that coordination can be achieved using a transfer price contract with bonus payments. We also provide insights on the sensitivity of the optimal decisions with respect to market characteristics, sequence of decisions and the firm's capacity level.
AB - We study a firm which serves customers that are sensitive to quoted price and leadtime, with pricing and leadtime decisions being made by the marketing and production departments, respectively. We analyze the inefficiencies created by the decentralization of the price and leadtime decisions. In the decentralized setting, the total demand generated is larger, leadtimes are longer, quoted prices are lower, and the firm's profits are lower as compared to the centralized setting. We show that coordination can be achieved using a transfer price contract with bonus payments. We also provide insights on the sensitivity of the optimal decisions with respect to market characteristics, sequence of decisions and the firm's capacity level.
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U2 - 10.1080/07408170701245346
DO - 10.1080/07408170701245346
M3 - Article
AN - SCOPUS:36148940246
VL - 40
SP - 12
EP - 30
JO - IIE Transactions (Institute of Industrial Engineers)
JF - IIE Transactions (Institute of Industrial Engineers)
SN - 2472-5854
IS - 1
ER -