*** First seminar of SEG5802 in semester 2***



       Department of Systems Engineering and Engineering Management,

                    The Chinese University of Hong Kong


Endogenous or Exogenous Service Quality in Setting Delivery Time
(a joint research with Dr. Liming Liu)

Wexin Shang
Dept. of Industrial Engineering and Logistics Management
Hong Kong University of Science and Technology

Date : January 6, 2006 (Friday)

Time : 4:30 p.m. - 5:30 p.m.

Venue : Room 513, William M.W. Mong Engineering Building

(Engineering Building Complex Phase 2), CUHK

Service delivery time is a key to success in service industry. Many providers
offer delivery time guarantees as a strategic weapon to compete for customers.
There are two dimensions in setting a delivery time: an attractive lead time
guarantee and measure of the ability for the realized lead time not deviating
from the guarantee. We call the second dimension the quality of service which
measures the probability that the realized delivery lead time is not greater
than the guaranteed delivery lead time. We study this decision problem in a
framework that integrates marketing and operations. For an individual
provider, we assume that her delivery time quotation and the service quality
simultaneously determine her market share, and she also needs to meet an
exogenous quality of service requirement. We are particularly interested in
whether there exists an optimal time decision that maximizes the providerˇ¦s
market share, and whether there is an incentive for her to adopt an endogenous
service quality higher than the industry standard, i.e. the exogenous quality.
For a small provider, we show analytically that the supplier should adopt an
endogenous service quality if and only if her capacity is sufficiently large.
For a highly competitive market, we show that there always exists a unique
Nash equilibrium of the delivery lead times and market allocation. We also
provide a simple algorithm to evaluate the Nash equilibrium. We further
demonstrate that the equilibrium service qualities exhibit some nice capacity-
based threshold structure.

Wexin Shang is a Ph.D. candidate in the department of Industrial Engineering
and Logistics Management at Hong Kong University of Science and Technology. He
received his bachelor of science from the department of mathematics at
Tsinghua University. His research interests include Supply Chain Management,
Logistics Management, Operations Research, Game Theory, Stochastic Processes
and Queueing Models.


Note : Cookies and drinks will be available at 4:15 pm.



                       ***** ALL ARE WELCOME *****

Host : Prof. Houmin Yan
Tel : 26098329
Email : yan@se.cuhk.edu.hk

For more information please

refer to http://www.se.cuhk.edu.hk/~seg5810/