Decision Sciences Journal
Volume 29, Number 3
Summer 1998
Influencing a Supplier Using Delivery Windows: Its Effect
on the Variance of Flow Time and On-Time Delivery
John R. Grout
Campbell School of Business, Berry College, Mount Berry, GA 30149-5024,
email: jgrout@campbell.berry.edu
Abstract: A critical outcome that buyers seek is the
timely delivery of the products they purchase from suppliers.
Delivery windows have been proposed as a means to achieve this
goal. This paper proposes a relatively simple model that shows
that delivery windows do not always improve delivery timeliness.
The effect of buyer-specified delivery windows on the supplier’s
flow-time variance, inventory, expected tardiness, and probability
of on-time delivery is analyzed. The analysis shows that although
using delivery windows may result in the supplier’s preferred
action being a reduction in the variance of flow time, actual
delivery timeliness may not improve. On-time delivery performance
is analyzed for linear and hyperbolic variance cost functions.
The results indicate that when the cost of maintaining lower
variances grows exponentially, variance reduction does not lead
to more timely deliveries.
Subject Areas: Buyer-Supplier Relations, Delivery Windows,
Incentives, Just-In-Time Systems, and On-Time Delivery. |