Service-based Capacity Strategy for Manufacturing Service Duopoly of Differentiated Prices and Lognormal Random Demand
Date Issued
2007
Date
2007
Author(s)
Chung, Hsien-Jung
DOI
zh-TW
Abstract
Globalization of production has ushered in vibrant manufacturing service industries. Many high-technology manufacturing service firms are no longer small shops on the receiving end of outsourced jobs. Instead, they frequently take initiative to forge supply relationships with product firms. In these engineering-manufacturing chains, certainty of capacity supply is an important concern as conservative (insufficient) capacity expansion is frequently prompted by high uncertainty of demand and investment risk. Capacity strategy has traditionally been discussed from a manufacturer’s perspective to time or size the investment, or to compete in a game setting. In the era of manufacturing services, customers’ concern of capacity (supply) certainty should be included as an important factor in formulating a capacity strategy. This paper presents a mathematical analysis of this new aspect. Uncertain demand is modeled as a lognormal random variable. A novel service-based demand rationing rule is developed for a duopoly of differentiated prices and lognormal random demand. Through numerical calculation, this paper shows the equilibrium of capacity strategy of the duopoly and analyzes their competition behavior on capacity services.
Subjects
產能策略
製造服務
對數常態分配需求
不確定需求
供給風險
Capacity strategy
Manufacturing services
Airline overbooking
Lognormal random demand
Demand uncertainty
Supply risk
Type
thesis
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