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Study of Service Guaranteed Delivery Time Based on Customer Waiting Time Cost

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3 Author(s)
Lei Liu ; Sch. of Econ. & Manage., Southwest Jiaotong Univ., Sichuan ; Hua Luo ; Xiao-wo Tang

Price and timely delivery are two important factors for success of service providers in today's competitive markets, and many service companies are offering time guarantees as a marketing weapon to attract customers in a time-sensitive market. In this paper, considering customer waiting time cost, a service guaranteed delivery time model is presented. In the model, the mean demand rate is a function of guaranteed delivery time, customer waiting time cost and service price which is determined by the length of the delivery time. Customer preference for time or price is analyzed based on the relationship between customer waiting time cost and the delivery time sensitivity of price. The impact of customer waiting time cost and price delivery time sensitivity on the optimal guaranteed delivery time and profit are also studied. A numerical example is given to verify the model

Published in:

Service Systems and Service Management, 2006 International Conference on  (Volume:1 )

Date of Conference:

Oct. 2006