A Management Game Model : Economic Traffic, Leadtime and Pricing Setting

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  • Management Game Model Economic Traffic Leadtime and Pricing Setting

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Recent market conditions require flexible or higher speed for products to reach markets. This speed is limited by a bottleneck under market/production capacity, and this problem is known as the theory of constraints (TOC) in the supply chain management (SCM). The model here proposed originates in a paper by Matsui (1983, 1988), and has quite a distinctive origin in comparison to the bottleneck theory in TOC. This paper presents a new management model of enterprises (MGM), gives a design or decision-making method for management, and discusses the similarities of the model in comparison with the theory of constraints (TOC). First, the MGM model is presented as the pair-type cooperative vs. non-cooperative game model of maximizing the throughput, i.e., the marginal profit between the sales price and the operating cost per unit time, under a bottleneck dependent to demand (market)/supply (production). Next, the 2-stage design method proposed determines the economic traffic of market/production in the first stage (economics), and sets the economic leadtime/pricing and constraints under the economic traffic in the second stage (reliability). Finally, a special example of MGM is given and considered under a M/M/1 enterprise model, a variety of management solutions/designs is discussed on a pair-matrix table, and a comparison to bottleneck solutions is noted.

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