Manufacturing Systems with Delivery Time Guarantee
In this chapter, we study production planning in a manufacturing system under Delivery Time Guarantees (DTG). DTG policy is a marketing strategy used by many commercial companies to attract and retain customers. Here are some examples of DTG policies used by different companies. United Parcel Services (UPS) guarantees next-day delivery by 8:30 am. Pizza Hut in Hong Kong offers a free pizza if the ordered pizza cannot be served within 20 minutes. Lucky, a major supermarket chain in California, use a “three’s a crowd” campaign, which guarantees a new checkout counter will be open if there are more than three people waiting in its checkout queue. Wells Fargo Bank offers a “five minute maximum wait policy” which offers five dollars to the customer if the customer waits for more than five minutes in line. We note that a DTG works under the condition that each customer is given a guaranteed quality of service. But in the mentioned examples if a company fails to fulfill its promise, it will lead to the loss of money, customers, and even the reputation of the company; see [16, 36, 44, 63, 64, 88].
KeywordsManufacturing System Delivery Time Inventory Level Penalty Cost Unit Price
Unable to display preview. Download preview PDF.