Postal Service in the Nineties

Boronico, Jess S.; Crew, Michael A.

doi:10.1007/978-94-011-0073-1_18

“…For the latter, (i) optimal prices are adjusted upward from marginal costs subject to the inverse-elasticity rule, which states that price increases are inversely related to the price elasticity of demand, and (ii) optimal reliabilities are still set so as to equate the costs and benefits of increasing reliability, although the results obtained for (9) become increasingly complex. Results for both cases are similar to the deterministic cases discussed in Crew andKleindorfer (1979, 1986)) although the model presented here bears sharp distinctions from those previously discussed in the literature due to the introduction of service differentiated pricing, stochastic demand, the reliability attribute, and the reliability constraint.…”

Section: Postal Modelsupporting

confidence: 78%

“…Recent changes in automation and competition have led to an increased awareness of cost-efficient operating policies with high levels of reliability for many postal services worldwide (Boronico, Crew, and Kleindorfer 1995). Although labor remains a significant portion of the total cost of goods and services rendered, there has been a continuing substitution of capital and information technology for labor.…”

Section: Literature Review and The Nature Of Postal Servicesmentioning

confidence: 99%

Reliability‐constrained Pricing, Capacity, and Quality: An Illustration of Economic Concepts to Postal Services

Boronico

¹

1999

Production and Operations Management

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A model is developed from which welfare‐optimal prices, capacities, and reliabilities for a service provider are simultaneously determined. Solutions are determined under conditions of stochastic demand subject to a reliability constraint on service quality. Both quality of service provided, as well as price, impact on demand for services rendered. Results indicate that (i) optimal prices are equated to the reliability‐constrained marginal costs, (ii) optimal reliabilities require that the marginal benefits of increasing reliability are equated to the marginal costs of doing so, and (iii) optimal capacity allocation involves minimizing the system's expected costs subject to meeting the prespecified reliability constraint for service quality. The model is applied to postal delivery services in light of the growing competition that has emerged in this industry.

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“…The model presented here also represents a variant of our previous work on optimal price and service and quality (Boronico, 1998;Crew and Kleindorfer, 1992) where welfare maximization is considered and profit maximization is alluded to but not specifically addressed. The models developed therein have been applied to postal services (Boronico, 1998a) and derive from those initially presented in Boronico, Crew, and Kleindorfer (1992). The application of the model presented here to the food industry builds upon Ittig (1994), extending that analysis through the incorporation of and simultaneous determination of both price and service quality as endogenous choice variables.…”

Section: Introduction and Literature Reviewmentioning

confidence: 99%

The Joint Determination of Price, Quality, and Capacity: An Application to Supermarket Operations

Boronico¹,

Panayides

²

2001

J. of Appl. Math & Decision Sc.

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This paper focuses on a service provider who, faced with competition, must determine the optimal price and level of service quality to provide in order to maximize profits. Service quality and price are assumed to impact jointly on demand for services. Both demand and service quality impact on the cost of providing service. While a considerable literature exists on the impact of service quality on demand or cost, less work has focused on the explicit impact of service quality jointly on both demand for and the cost of providing services. A service quality constraint is appended to the formulation in order to guarantee that a declared service standard is met. Conditions are developed which characterize optimal solutions, together with comparative statics. Illustrative results are presented based on empirical data obtained from a supermarket study.

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“…The model presented here also represents a variant of our previous work on optimal price and service and quality (Boronico, 1998;Crew and Kleindorfer, 1992) where welfare maximization is considered and profit maximization is alluded to but not specifically addressed. The models developed therein have been applied to postal services (Boronico, 1998a) and derive from those initially presented in Boronico, Crew, and Kleindorfer (1992). The application of the model presented here to the food industry builds upon Ittig (1994), extending that analysis through the incorporation of and simultaneous determination of both price and service quality as endogenous choice variables.…”

Section: Introduction and Literature Reviewmentioning

confidence: 99%

The joint determination of price, quality, and capacity: An application to supermarket operations

Boronico

¹

,

Panayides

²

2001

Journal of Applied Mathematics and Decision Sciences

Self Cite

3

0

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This paper focuses on a service provider who, faced with competition, must determine the optimal price and level of service quality to provide in order to maximize profits. Service quality and price are assumed to impact jointly on demand for services. Both demand and service quality impact on the cost of providing service. While a considerable literature exists on the impact of service quality on demand or cost, less work has focused on the explicit impact of service quality jointly on both demand for and the cost of providing services. A service quality constraint is appended to the formulation in order to guarantee that a declared service standard is met. Conditions are developed which characterize optimal solutions, together with comparative statics. Illustrative results are presented based on empirical data obtained from a supermarket study.

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Postal Service in the Nineties

Cited by 9 publications

References 20 publications

Reliability‐constrained Pricing, Capacity, and Quality: An Illustration of Economic Concepts to Postal Services

Reliability‐constrained Pricing, Capacity, and Quality: An Illustration of Economic Concepts to Postal Services

The Joint Determination of Price, Quality, and Capacity: An Application to Supermarket Operations

The joint determination of price, quality, and capacity: An application to supermarket operations

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