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

Mingming Leng (), Rafael Becerril-Arreola (), Mahmut Parlar () and Mark Ferguson ()
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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
Authors registered in the RePEc Author Service: Rafael Becerril Arreola

Manufacturing & Service Operations Management, 2024, vol. 26, issue 5, 1918-1924

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.

Keywords: service operations; delivery time; pricing; information disclosure; online retailing (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormsom:v:26:y:2024:i:5:p:1918-1924

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