Based on Lead Time Capacity Allocation Study

Chao WEI


In this paper, we study a firm serving two kinds of products (services) which are fast lead time service and slow lead time service. The products (services) differ only in their delivery times and prices. We assume that there are two types of customers which are time-sensitive and price-sensitive customers in the market. We found that the optimal proportion of capacity allocation is influenced by the proportion of lead time sensitive customers, capacity and the total size of the market. An increase in the optimal proportion of capacity allocation can increase the capacity and the proportion of lead time sensitive customers, but decreases the total size of the market.


Capacity allocation; Lead time; Heterogeneous customers

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