Abstract
In this paper, a pricing and lead time determination problem, is investigated in a hybrid MTS/MTO production environment using Stackelberg game. A manufacturing company with three types of products including MTS, MTS/MTO and MTO and a manufacturing system consists of one common and one differentiation stage is considered. Due to the conflict of interests between these two stages, the decision making sequence is modelled using a Stackelberg game where the differentiation and the common stages are considered to be leader and follower, respectively. The company aims to satisfy the demand of MTS products along with on time delivery of MTS/MTO and MTO orders. The optimal order price and delivery time are suggested to be obtained from a profit maximization model, where the market demand is affected by these two values. Finally, a simulation model is conducted to examine the effectiveness of the proposed model and also to implement a sensitivity analysis on the results.
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