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DELIVERY GUARANTEES AND THE INTERDEPENDENCE OF MARKETING AND OPERATIONS
Author(s) -
CHATTERJEE SUBIMAL,
SLOTNICK SUSAN A.,
SOBEL MATTHEW J.
Publication year - 2002
Publication title -
production and operations management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 3.279
H-Index - 110
eISSN - 1937-5956
pISSN - 1059-1478
DOI - 10.1111/j.1937-5956.2002.tb00193.x
Subject(s) - tardiness , revenue , computer science , order (exchange) , operations research , profit (economics) , maximization , revenue management , profit maximization , business , customer satisfaction , operations management , marketing , mathematical optimization , microeconomics , economics , finance , mathematics , job shop scheduling , computer network , routing (electronic design automation)
Delivery guarantees are an important element in a customer satisfaction program. When setting delivery guarantees, a firm must consider customer expectations as well as operational constraints. We develop a profit‐maximization model in which a firm's sales organization, with incomplete information on operations' status, solicits orders and quotes delivery dates. If obtained, orders are processed in a make‐to‐order facility, after which revenue is received, minus tardiness penalty if the delivery was later than quoted. We specify conditions for an optimal log‐linear decision rule and provide exact expressions for its effect on arrival rate, mean processing time, and mean cycle time.