An Empirical Study of Service Differentiation for Weapon System Service Parts

Deshpande, Vinayak; Cohen, Morris A.; Donohue, Karen

doi:10.1287/opre.51.4.518.16099

Cited by 43 publications

(9 citation statements)

References 18 publications

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“…In contrast to the theory proposed by Bowman, many researchers have examined managerial behavior using real-life data and laboratory experiments, and found that managers' decisions do not correspond to the expected profit-maximizing decisions due to the complexity of the situation (Deshpande et al 2003, Keizers et al 2003 or some form of decision bias (Schweitzer andCachon 2000, Croson andDonohue 2006). Unlike the settings in these papers, store managers in our setting are provided an automated system and voluntarily choose to deviate from it.…”

Section: Literature Reviewmentioning

confidence: 82%

“…This controlled data set, however, enables us to obtain cleaner results than would be possible from comparing dissimilar firms in a single estimation model. In this respect, our paper falls in the realm of previous studies that have used real-life data from a single research site, see for example, Fisher and Ittner (1999), Deshpande et al (2003), Keizers et al (2003), or Fisher et al (2006.…”

Section: Literature Reviewmentioning

confidence: 99%

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Ordering Behavior in Retail Stores and Implications for Automated Replenishment

et al. 2010

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Retail store managers may not follow order advices generated by an automated inventory replenishment system if their incentives differ from the cost minimization objective of the system or if they perceive the system to be suboptimal. We study the ordering behavior of retail store managers in a supermarket chain to characterize such deviations in ordering behavior and investigate their potential drivers. Using orders, shipments, and POS data for 19, 417 item-store combinations over 5 stores, we find that store managers systematically modify automated order advices by advancing orders from peak to non-peak days. We show that order advancement is explained significantly by hypothesized product characteristics, such as case-pack size relative to average demand per item, net shelf space, product variety, demand uncertainty, and seasonality error. Our results suggest that store managers add value. They improve upon the automated replenishment system by incorporating two ignored factors: in-store handling costs and sales improvement potential through better in-stock. We test a heuristic procedure, based on our regression results, to modify order advices to mimic the behavior of store managers. Our method performs better than the store managers by achieving a more balanced handling workload with similar average days of inventory.

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Section: Literature Reviewmentioning

confidence: 82%

Section: Literature Reviewmentioning

confidence: 99%

Ordering Behavior in Retail Stores and Implications for Automated Replenishment

et al. 2010

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“…We also study reliability empirically but in a different industry and in the contracting choice context. In an empirical study that focuses on after-sales support for defense systems, Deshpande et al (2003) analyze how the interaction of attributes such as the criticality and cost of service parts and the nature of inventory policies to manage them affect performance. As in our case, this is an empirical study in an aftermarket context, although it is not focused on reliability or contracting.…”

Section: Literature Reviewmentioning

confidence: 99%

Impact of Performance-Based Contracting on Product Reliability: An Empirical Analysis

et al. 2012

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Using a proprietary data set provided by a major manufacturer of aircraft engines, we empirically investigate how product reliability is impacted by the use of two different types of after-sales maintenance support contracts: time and material contracts (T&MC) and performance-based contracts (PBC). We offer a number of competing arguments based on the theory of incentives that establish why product reliability may increase or decrease under PBC. We build a two-stage econometric model that explicitly accounts for the endogeneity of contract choices, and find evidence of a positive and significant effect of PBC on product reliability. The estimation of our model indicates that product reliability is higher by 25%-40% under PBC compared to under T&MC, once the endogeneity of contract choice is taken into account. Our results are consistent with two mechanisms for reliability improvement under PBC: more frequent scheduled maintenance and better care performed in each maintenance event. AbstractUsing a proprietary dataset provided by a major manufacturer of aircraft engines, we empirically investigate the impact of incentives present in after-sales repair and maintenance support contracts on product reliability. In particular, we compare the reliability of products under time and material (T&M) contracts, which have been used traditionally in the airline industry, with the reliability under performance-based contracts (PBC), which are gaining wide acceptance.We discover that there is inherent endogeneity in contract choices by the customers. To account for this endogeneity, we estimate a two-stage econometric model, and find that larger customers and users of certain equipment types are more likely to select PBC over T&M contracts. After controlling for this selection process, we find evidence for the positive and significant effect of performance incentives created by PBC on product reliability. Our estimates indicate an improvement of product reliability in the 10-25% range under PBC, compared to the reliability observed under T&M contracts. This finding is robust to numerous alternative specifications, modeling assumptions and estimation methods. Thus our research provides a valuable input into the ongoing policy debate about the effectiveness of performance contracts which are currently being introduced extensively in both the government and the private sectors.2

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“…The indispensable nature of a good field service for high-tech products, especially electronics-based are felt while a company desperately looks for a competitive edge in the market (Hull and Cox, 1994). The latest study emphasises that supply chain has an increasingly important role in customer support services (Deshpande et al, 2003).…”

Section: Customer Supportmentioning

confidence: 99%

Field-level customer support decision model for high-tech products in India

Shankar¹,

Vijayaraghavan²,

Narendran³

2007

IJMDM

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Product support offers competitive differentiation for high-tech products in developing markets like India. Highly fluctuating number of daily customer field-service requests mandate 'optimal field staffing decision'. Despite an operational decision, it assumes strategic significance influencing long run customer service level. Companies decide on the field staff strength (fixed and outsourced) to comply with the fluctuating field service demand. This study models a real-time customer support system featuring restricted daily working hours and decision making epochs. The study assesses the daily field service demand based on the cumulative sales developing a methodology. Study uses stochastic principles to derive mathematical expressions for average customer waiting time and cost of customer service in a service system with decision-making epochs. Real time data that validates model shows that customer waiting time minimises with increased number of decision epochs without affecting the cost of service.

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An Empirical Study of Service Differentiation for Weapon System Service Parts

Cited by 43 publications

References 18 publications

Ordering Behavior in Retail Stores and Implications for Automated Replenishment

Ordering Behavior in Retail Stores and Implications for Automated Replenishment

Impact of Performance-Based Contracting on Product Reliability: An Empirical Analysis

Field-level customer support decision model for high-tech products in India

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