The Study Of MTO Manufacturers’s Guaranteed Delivery Time Model With Order Batching

With the rapid development of e-commerce, delivery time has become an important factor that affects customer purchase decisions, and more and more MTO manufacturers gain competitive advantage by it. For MTO manufacturers, the most common strategy is providing time guarantee. While providing time guarantee can be an effective marketing approach, it is critical for firms to reduce lead time to keep the promise. Decreasing lot size in batching is one of the most important levers to compress lead time in operation. This research expands existing delivery-time guarantee models by integrating operation and marketing. The MTO manufacturers’ guaranteed delivery time model with order batching is established.Firstly, we study MTO manufacturers’ guaranteed delivery time problem with order batching. We assume that the transportation lead time is fixed and establish a guaranteed delivery time model with considering production lead time. We obtain the optimal lot size and optimal guaranteed delivery time. Then we assume that the transportation lead time is variable and establish a guaranteed delivery time model with considering both production lead time and transportation lead time. We get the optimal production lead time and optimal transportation lead time. At last, we study MTO manufacturers’ guaranteed delivery time problem with price depending on the delivery time. Some analytic results are provided and numerical examples are conducted to provide further insight into the problem. The results indicate that the batch processing setup cost, unit inventory holding cost and customers’ delivery time and price sensitivities have different influences on the manufacturer’s delivery time decisions.Secondly, we study MTO manufacturers’ guaranteed delivery time problem with mixed strategies. The models of guaranteed delivery time and the urgent fee of MTO manufacturer with and without batching mode are established. We analyse the effects of parameters on the optimal strategies. The results indicate that the customers’ delivery time and price sensitivities, cross-price and cross-time sensitivities have different influences on the manufacturer’s delivery time and urgent fee decisions.Finally, we research the coordination problem based on the centralized decision-making. Lead time discount contract is designed to coordinate MTO manufacturers internal supply chain, studies have shown that when the discount rate of unit product transfer payment provided by operation department is between a certain range, the lead time discount contract can achieve MTO manufacturer’s pareto improvement.