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There is now a CONTENT FREEZE for Mercury while we switch to a new platform. It began on Friday, March 10 at 6pm and will end on Wednesday, March 15 at noon. No new content can be created during this time, but all material in the system as of the beginning of the freeze will be migrated to the new platform, including users and groups. Functionally the new site is identical to the old one. webteam@gatech.edu
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We study a firm which serves customers that are sensitive to quoted price and leadtime, where pricing decisions are made by the marketing department and leadtime decisions by the production department. We analyze the inefficiencies that are due to the decentralization of the price and leadtime decisions. In the decentralized case, the total demand generated is larger, leadtimes are longer, quoted prices are lower, and the firm profits are lower as compared to the centralized case. We explore coordination mechanisms and examine their robustness to estimation errors in the problem parameters. We also provide insights on the sensitivity of the optimal decisions with respect to market characteristics and the firm's capacity level.
