Influencing a supplier using delivery windows: Its effect on the variance of flow time and on-time delivery

A critical outcome that buyers seek is the timely delivery of the products they purchase from suppliers. Delivery windows have been proposed as a mean s to achieve this goal. This paper proposes a relatively simple model that shows that delivery windows do not always improve delivery timeliness. The effect of buyer-specified delivery windows on the supplier's flow-time vari ance, inventory, expected tardiness, and probability of on-time delivery is analyzed. The analysis shows that although using delivery windows may resu lt in the supplier's preferred action being a reduction in the variance of flow time, actual delivery timeliness may not improve. On-time delivery per formance is analyzed for linear and hyperbolic variance cost functions. The results indicate that when the cost of maintaining lower variances grows e xponentially, variance reduction does not lead to more timely deliveries.