Dynamic Pricing and Lead-Time Quotation for a Multiclass Make-to-Order Queue

Authors:
Sabri Çelik;Costis Maglaras
Affiliations:
Department of Industrial Engineering and Operations Research, Columbia University, New York, New York 10027;Columbia Business School, Columbia University, New York, New York 10027
Venue:
Management Science
Year:
2008

Citing 0
Cited 10

Optimal control of a high-volume assemble-to-order system with maximum leadtime quotation and expediting

Queueing Systems: Theory and Applications
Dynamic Control of a Make-to-Order, Parallel-Server System with Cancellations

Operations Research
Near-Optimal Dynamic Lead-Time Quotation and Scheduling Under Convex-Concave Customer Delay Costs

Operations Research
Revenue Optimization for a Make-to-Order Queue in an Uncertain Market Environment

Operations Research
Congestion-based leadtime quotation and pricing for revenue maximization with heterogeneous customers

Queueing Systems: Theory and Applications
Congestion-Based Lead-Time Quotation for Heterogenous Customers with Convex-Concave Delay Costs: Optimality of a Cost-Balancing Policy Based on Convex Hull Functions

Operations Research
Congestion-Based Lead-Time Quotation for Heterogenous Customers with Convex-Concave Delay Costs: Optimality of a Cost-Balancing Policy Based on Convex Hull Functions

Operations Research
Scheduling with compressible and stochastic release dates

Computers and Operations Research
Incentive-Compatible Revenue Management in Queueing Systems: Optimal Strategic Delay

Manufacturing & Service Operations Management
Pricing Time-Sensitive Services Based on Realized Performance

Manufacturing & Service Operations Management

Quantified Score

Hi-index	0.01

Visualization

Abstract

This paper considers a profit-maximizing make-to-order manufacturer that offers multiple products to a market of price and delay sensitive users, using a model that captures three aspects of particular interest: first, the joint use of dynamic pricing and lead-time quotation controls to manage demand; second, the presence of a dual sourcing mode that can expedite orders at a cost; and third, the interaction of the aforementioned demand controls with the operational decisions of sequencing and expediting that the firm must employ to optimize revenues and satisfy the quoted lead times. Using an approximating diffusion control problem we derive near-optimal dynamic pricing, lead-time quotation, sequencing, and expediting policies that provide structural insights and lead to practically implementable recommendations. A set of numerical results illustrates the value of joint pricing and lead-time control policies.