Centralized vs. Decentralized Competition for Price and Lead-time Sensitive Demand

We study two firms that compete based on their price and lead-time decisions in a common market. We explore the impact of the decentralization of these decisions, as quoted by the marketing and production departments, respectively, comparing three scenarios: (i) Both firms are centralized, (ii) only one firm is centralized, (iii) both firms are decentralized. We find that under intense price competition, firms may suffer from a decentralized strategy, particularly under high flexibility induced by high capacity, where revenue based sales incentives motivate sales/marketing for more aggressive price cuts resulting in eroding margins. On the other hand, when price competition in the market is less intense than lead-time competition, a decentralized decision making strategy may dominate a centralized decision making strategy

ABSTRACT A TABU SEARCH ALGORITHM FOR PARALLEL MACHINE TOTAL TARDINESS PROBLEM

In this study, a Tabu Search (TS) approach to the parallel machine scheduling problem is presented. The problem considered consists of a set of independent jobs to be scheduled on a number of parallel processors to minimize total tardiness. Several surveys on parallel machine scheduling with due date related objectives [1, 2, 3] reveal that the NP-hard nature of the problem renders it a challenging area for many researchers who studied various versions. However, most of these studies have the assumption that jobs are available at the beginning of the scheduling period, which is an important deviation form reality. Here, as well as distinct due dates and ready times, features such as sequence dependent setup times and different processing rates for machines are incorporated into the classical model. These enhancements approach the model to the actual practice at the expense of complicating the problem further. The motivation of this study has been to explore the ability of Tabu Search to overcome these difficulties superimposed on the traditional parallel machine scheduling problem. In order to obtain a robust search mechanism, several key components of TS such as candidate list strategies, tabu classifications, tabu tenure and intensification/diversification strategies are investigated. Alternative approaches to each of these issues are developed and extensively tested on a set of problems obtained from the literature. Considerably better results are obtained and the success of the totally deterministic TS algorithm implemented is thereby demonstrated