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Disclosing Delivery Performance Information When Consumers Are Sensitive to Promised Delivery Time, Delivery Reliability, and Price

Author

Listed:
  • Mingming Leng

    (Faculty of Business, Lingnan University, Hong Kong)

  • Rafael Becerril-Arreola

    (Darla Moore School of Business, University of South Carolina, Columbia, South Carolina 29208)

  • Mahmut Parlar

    (DeGroote School of Business, McMaster University, Hamilton, Ontario L8S 4M4, Canada)

  • Mark Ferguson

    (Darla Moore School of Business, University of South Carolina, Columbia, South Carolina 29208)

Abstract

Problem definition : We investigate how the characteristics of consumers and a service firm influence the firm’s optimal pricing and promised delivery-time decisions as well as the optimal investment in the quality of delivery reliability information available to consumers. Methodology/results : We use utility, queuing, and choice modeling theories to model consumers’ behavior and to find solutions to the firm’s profit maximization problem. Managerial implications : The optimal strategy is to disclose either error-free delivery reliability information or no information at all. We also delineate conditions for each of the two strategies to dominate.

Suggested Citation

  • Mingming Leng & Rafael Becerril-Arreola & Mahmut Parlar & Mark Ferguson, 2024. "Disclosing Delivery Performance Information When Consumers Are Sensitive to Promised Delivery Time, Delivery Reliability, and Price," Manufacturing & Service Operations Management, INFORMS, vol. 26(5), pages 1918-1924, September.
    • Handle: RePEc:inm:ormsom:v:26:y:2024:i:5:p:1918-1924
    DOI: 10.1287/msom.2023.0223
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