PRICING DECISION AND LEAD TIME SETTING IN A DUOPOLY SEMICONDUCTOR INDUSTRY

Abstract

Pricing and lead time setting are two important decisions in semiconductor foundry industries. This research considers the competition of a duopoly market consisting of two make-to-order firms in semiconductor foundry industries and presents a model to determine the equilibrium price and lead time of these two competing firms where each firm maximizes its own revenue and is subject to its own constraints in a duopoly market. In the model, customer mean demand rates of two competing firms are assumed as functions of committed lead times and prices provided by these two firms and the market. Furthermore, this paper utilizes a simulated procedure to verify the equilibrium price and lead time obtained by the analytical model presented in this paper.