TY  - JOUR
AB  - Decision analysis in management science employs concepts from economics such as utility functions and indifference curves. A utility function U models the “satisfaction” that a customer obtains from logistics service. Here U depends on two attributes (lead time, fill rate) whose values more directly represent customer service. The shipper can, at additional cost, improve either or both of these attributes. Constructs and maximizes various utility functions U given a total budget B for distribution service. Finds that without increasing the budget overall logistics service can often be improved from the customer’s point of view. Whether U is additive or multiplicative, a customer’s utility resulting from the optimal lead time and fill rate is typically 20 per cent higher than when those attribute levels are set intuitively (without reference to customer preferences and tradeoffs expressed by U). Gives some introduction to decision analysis (certainty equivalent, risk aversion, …) to aid in understanding the functional forms employed for U and methods of solution, rendering the paper more self‐contained.
VL  - 27
IS  - 9/10
SN  - 0960-0035
DO  - 10.1108/09600039710188585
UR  - https://doi.org/10.1108/09600039710188585
AU  - Bookbinder James H.
AU  - Lynch Maureen E.
PY  - 1997
Y1  - 1997/01/01
TI  - Customer service in physical distribution: a utility‐function approach
T2  - International Journal of Physical Distribution & Logistics Management
PB  - MCB UP Ltd
SP  - 540
EP  - 558
Y2  - 2024/04/23
ER  -