Price And Lead Time Decisions Under Competitive Environment

With the rapid development of the global economy, especially the wide spread use of the Internet, and gradually increase the consumer concept of time, the time factor and the price factor gradually dominate the common customer needs. In order to expand market share and improve revenues, enterprises pay more attention to lead time and pricing decisions. In addition, as customers continuing to improve the level of consumption and consumer demand increasingly diversified and personalized, the competitive market model has changed. Enterprises rely solely on the past competition that provide low-cost, high-quality products and services, has become insufficient to win customer orders, but only faster and better than its competitors and personalized to meet diverse customer needs, it can survive and develop in the fierce competition. Therefore, taking duopoly competitive market as the research background, and based on customer loyalty, this paper builds price and lead time decision-making models in competitive environment for enterprise, to analyze and discuss different strategies of enterprises’ optimal decisions and optimal profits.This paper assumes that market demand is divided into three parts, loyal to the enterprise 1 customer needs, loyal to the enterprise 1 customer needs and competing demands. Firstly, we establish a price and lead time decision model under Bertrand competition to study the optimal business decision, it is found that in the price-sensitive customer demand, with the increase of customer loyalty market size, both optimal lead time will increase, and the optimal price will decrease, and the profit is a convex function of its loyal customers market size. However, under the time-sensitive customer demand, profits and the optimal decision remain unchanged.Secondly, considering the effects of different competitive strategies of business decisions, the paper expands the basic model to study the optimal decision behavior of enterprises under stackelberg competition. Through comparing the two different competitive strategies and analyzing the size of corporate profits, we obtain that in the price-sensitive demand, stackelberg competition strategy can effectively improve the overall revenue of the two companies, and stackelberg competition policy for the two companies is the best, and in lead time-sensitive customer needs, both competitive strategies have no differences.Finally, the enterprise service capacity constrains is introduced into the competition decision-making model, which is designed for enterprises to seek better management strategies. We can get the optimal decisions and optimum profits of enterprises. With numerical analysis, we analyze and discuss when the enterprises’ capacity changes, the business decision-making and optimal profits is how to change. The results show that when the service capabilities are lower, companies will make full use of their own conditions, to maximize the meet customer needs, but when the capacity services are higher, enterprises will reach an equilibrium state, where the optimal decision and optimum profit remain unchanged.