Competitive location and capacity decisions for firms serving time‐sensitive customers

Kwasnica, Anthony M.; Stavrulaki, Euthemia

doi:10.1002/nav.20316

Cited by 21 publications

(8 citation statements)

References 29 publications

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“…There is only one study in this category accomplished by Kwasnica and Stavrulaki (2008), which explored how two firms locate and set capacities to serve time-sensitive customers. Because customers are time-sensitive, they may decline to place an order from either competitor if their expected waiting time is large.…”

Section: Location-other Variables Models In Competition With Foresighmentioning

confidence: 99%

Competitive location: a state-of-art review

Ashtiani¹

2016

10.5267/j.ijiec

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This paper provides a review on recent works in the field of competitive facility location models based on the following seven components: 1) Variables, 2) Competition type, 3) Solution space, 4) Customer behavior, 5) Demand type, 6) Number of new facilities and 7) Relocation and redesign possibility. First, the components are introduced and then based on these components; different studies are compared with each other via a proposed taxonomy and finally a review on work of each paper is provided.

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Section: Location-other Variables Models In Competition With Foresighmentioning

confidence: 99%

Competitive location: a state-of-art review

Ashtiani¹

2016

10.5267/j.ijiec

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“…Our article complements the extensive literature that investigates competitive equilibrium in a market with demand uncertainty (e.g., [19,20,38]). One common feature in this literature stream is that demand uncertainty is captured by consumer's location/taste and incorporated with a Hotelling line segment (e.g., [6,12,23]). Therefore, two competing sellers who produce identical products must make their location and then their price decisions.…”

Section: Related Literaturementioning

confidence: 99%

Timing of information acquisition in a competitive environment

Guan

Chen

2016

Naval Research Logistics

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This article investigates the impact of timing on sellers' information acquisition strategies in a duopoly setting. Market uncertainty is captured by a representative consumer who has a private taste for the product's horizontal attribute, and both sellers can acquire this information either before (ex-ante acquisition) or after (ex-post acquisition) observing their own product qualities. We identify several conflicting effects of information acquisition that vary significantly in its timing and market characteristics. In the monopoly scenario, information acquisition is unambiguously beneficial and ex-ante acquisition is the dominant option, because it helps a seller not only design the proper product but also craft better pricing strategy. By contrast, when there is competition, information acquisition eliminates the buffer role of market uncertainty and leads to the fiercest production or pricing competition, which makes the subsequent effects of acquisition detrimental, and a seller's payoff is nonmonotonic in terms of its acquisition cost. Moreover, compared with the ex-ante information acquisition, ex-post information acquisition normally generates higher sellers' equilibrium payoffs by postponing the timing of acquisition and maintaining product differentiation. Nonetheless, ex-post information acquisition also provides the seller with greater acquisition incentive and occasionally makes him worse off than that in the ex-ante scenario. Thus, in a competitive environment, having the option of information acquisition and flexibility in its timing can be both detrimental and irresistible.

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“…Researchers have recently investigated the interactions among various subsets of the (price, location, capacity) space. In a competitive environment, for example, a group of papers hold the price fixed while varying capacity (e.g., [20,15,23]), a second group of papers hold capacity fixed and vary price (e.g., [27,25,34]), while a third group of papers examines simultaneous, or sequential, pricing and capacity decisions (e.g., [33,28,9,10]). With the exception of [23], these papers focus on the equilibrium solutions of competing firms, but they do not incorporate the notion of distance and server location in their models.…”

Section: Literature Reviewmentioning

confidence: 99%

Simultaneous price, location, and capacity decisions on a line of time‐sensitive customers

Dobson

Stavrulaki

2006

Naval Research Logistics

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Consider a monopolist who sells a single product to time-sensitive customers located on a line segment. Customers send their orders to the nearest distribution facility, where the firm processes (customizes) these orders on a first-come, first-served basis before delivering them. We examine how the monopolist would locate its facilities, set their capacities, and price the product offered to maximize profits. We explicitly model customers' waiting costs due to both shipping lead times and queueing congestion delays and allow each customer to self-select whether she orders or not, based on her reservation price. We first analyze the single-facility problem and derive a number of interesting insights regarding the optimal solution. We show, for instance, that the optimal capacity relates to the square root of the customer volume and that the optimal price relates additively to the capacity and transportation delay costs. We also compare our solutions to a similar problem without congestion effects. We then utilize our single-facility results to treat the multi-facility problem. We characterize the optimal policy for serving a fixed interval of customers from multiple facilities when customers are uniformly distributed on a line. We also show how as the length of the customer interval increases, the optimal policy relates to the single-facility problem of maximizing expected profit per unit distance.

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Competitive location and capacity decisions for firms serving time‐sensitive customers

Cited by 21 publications

References 29 publications

Competitive location: a state-of-art review

Competitive location: a state-of-art review

Timing of information acquisition in a competitive environment

Simultaneous price, location, and capacity decisions on a line of time‐sensitive customers

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