Models for integrated inventory and lead-time planning
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abstract
Production, procurement, and order lead times can substantially affect operations performance and perceived customer service. In addition to price and quality, customers are often highly sensitive to supply lead times, while suppliers increasingly depend on fast response times as an important source of sustainable competitive advantage. In this paper, we study a lead time decision problem where a firm's demand level depends upon the customer's order lead time. We examine the impact of lead times on operations performance and profitability, and provide a model and methods to determine an optimal lead time under demand sensitivity to lead times.