Revista Internacional de Economía y Ciencias de la Gestión

Production Capacity Planning with Market Share Expansion under Different Procurement Strategies

Abstract

Sidi Wu and Hisashi Onari

Market share expansion strategy is usually considered by the manufacturers who intend to achieve lower production cost to extend the surviving period in mature markets where intense price competition occurs frequently. This study will discuss one manufacturer who is producing mature stage products and supplying them to product market to serve the end users. In order to produce the products, it is necessary for the manufacturer to procure the key components of the products from the component market which is on its fast-growing stage with high price fluctuation. Spot procurement and SC procurement are to be compared to find out which is a better strategy to support the manufacturer in the decision-making of production capacity. Profit rate, deficit rate and market share rate are considered as the valuation index in this study.