Characterizing Performance-Based Demand Allocation Policies to Stimulate Supplier Capacities in a Time-Based Competitive Environment
Lead time performance-based demand allocation policies have been implemented in many industries where buyers fulfill their demands from competing suppliers. Such policies can be used to stimulate suppliers to further build up their capacities so as to reduce their delivery lead times. We consider a queuing framework to characterize a more general class of stationary demand allocation polices in terms of their ability to stimulate equilibrium capacity amongst suppliers, vis-à-vis those considered in the literature. These stationary policies represent situations wherein each suppliers long-run average demand is less than its capacity when suppliers total capacity exceeds buyers total demand, thus resulting in finite average lead times under equilibrium. We first characterize a generic policy with symmetric and concave market share functions and show that it requires the same lower-bound supplier price as all other stationary policies studied in the literature. Next, we show that when balanced allocation policy has a pure Nash equilibrium, it continues to stimulate the highest equilibrium capacity even among a wide variety of allocation policies in this class. Finally, we introduce residual proportional allocation as a new policy and show that it contains balanced allocation as a special case. In addition, it usually stimulates the highest equilibrium capacity among all allocation policies when balanced allocation does not have a pure Nash equilibrium.
Supplier capacity management competing suppliers demand allocation policy stationary policy
Xiting Gong Qiwen Wang Nagesh N.Murthy Honghui Deng
Guanghua School of Management Peking University, Beijing 100871, China Decision Sciences Department, Lundquist College of Business 468 Lillis Business Complex, University College of Business University of Nevada Las Vegas
国际会议
香港·广州
英文
472-476
2010-07-25（万方平台首次上网日期，不代表论文的发表时间）