J. Serv. Sci. & Management. 2008, 1: 29-49
Published Online June 2008 in SciRes (www.SRPublishing.org/journal/jssm)
Value Delivery Systems under the Instantaneous
Competition
Guo-Jun Ji
School of Management, Xiamen University, Xiamen Fujian, 361005, China
ABSTRACT
In this paper, the necessary conditions and the components of the operation of value delivery under the instantaneous
competition system are analyzed; the every node enterprise to make clear that the function of each of them in value
creation and increase is discussed. The processes and model of a value delivery system are discussed in this paper, and
the processes content and model are presented, we firstly discuss the operational flowchart and classification of the
value delivery under the instantaneous competition environment. Secondly, we analyze the tactics of the instantaneous
competition in supply chain system and the marketing system, both of which compose the whole value delivery system.
Thirdly, we analyze some factors that must be controlled in value delivery system. Finally, we set up a multi-objective
optimization model, which is a mixed-integer nonlinear programming problem. And a case study illustrates our
conclusions.
Keywords: Value delivery system, Instantaneous competition, Multi-objective o ptimization
1. Introduction
The essence of time-based competition involves
compressing time in every phase of the product
development and delivery cycle, which becomes one of
the most important strategies for enterprises development
in nowadays. The competition mode is called
instantaneous competition in this paper. Enterprises take
quick respond to the demands of customers and rapid
introduction of new products as the main strategic target
and possess competitive cost and service quality at the
same time, so they have to reduce the process time of
service (involved product) planning and developing,
producing, selling and transporting. Under the
globalization environment, in which product life cycle
becomes shorter and demand forecast is harder, the
instantaneous competition between enterprises is very
necessary. Value delivery system (VDS) is one of the
most important processes, which includes the whole
supply chain system and the marketing network of the
service. The operational objective of VDS is to maximize
the value that deliver to customer and realize the profit of
member companies in system which obtained by
participation in value creation. According to the different
functions, a VDS can be divided into two portions: one is
the supply chain system, and the other is the marketing
system, which will be discussed separately later. However,
we must consider the influence on service or band value
both from the strategy selection in supply chain system
and from the implement effect of marketing policy
synthetically.
Research on VDS under the instantaneous competition
is to control the service stream, stock and cost to
maximize the value that delivered from the system to
customers, and considering the influence of product
lifecycle on the product demand and price simultaneity. It
is because that demand and price of the product are
always the main factors to weigh whether a product
possess advantages in competition or not. And under the
instantaneous competition, these factors are also sensitive
to time, each of which change dramatically in different
process of product’s lifecycle. So, in this paper, we will
forecast the product’s demand and price at some periods
by using some forecasting model in marketing and the
results will be involved to compute how the value is in
the VDS, which is the criterion to consider the advantage
that the company. With the global economy development,
a remarkable phenomenon shows that the VDS exists to
create value for customers by supplying demand products
and services. VDS and its abilities are at the heart of
every firm and, more than anything else, determine
whether the firm survives in the marketplace or disappear
into bankruptcy or reengineered. VDS may cover many
forms as illustrated by these two cases [8] as follows: (1)
Facing increased competition and customers who are
smarter, more demanding, and less brand-loyal,
McDonald’s is reevaluating the way it makes some of the
items on its menu. For example, it is considering a switch
to a hamburger bun that does not require toasting. In trial
tests, customers seemed to prefer the new bun’s taste and
texture. Furthermore, not toasting buns should translate
into substantial cost savings due to reduced preparation
time and the elimination of commercial toasting

30 Guo-Jun Ji
equipment [6]. (2) It is not well known that the Kmart and
Wal-Mart chains both date back to 1962. By 1987 Kmart
was clearly dominating the discount chain race, with
almost twice as many stores and sales of $25 - $63 billion
to Wal-Mart’s $15.96 billion. However, for the retail year
that ended in January 1991, Wal-Mart had overtaken
Kmart, with sales of $32.6 billion to Kmart’s sales of
$29.7 billion. Interestingly, although Wal-Mart had taken
the lead in sales in 1991, it still had fewer stores-1721 to
Kmart’s 2330. By the 1997 retail year, Wal-Mart had
clearly established itself as the dominant discount chain,
with sales of $106.1 billion to Kmart’s $31.4 billion. For
the period from 1987 to 1995 Kmart’s market share
declined from 34.5 percent to 22.7 percent, while Wal-
Mart’s increased from 20.1 percent to 41.6 percent. What
accounts for this reversal in fortunes? Kmart’s response to
the competition from Wal-Mart was to build on its
marketing and merchandising strengths and invest heavily
in national television campaigns using high-profile
spokespeople such as Jaclyn Smith. Wal-Mart took an
entirely different approach and invested millions of
dollars in VDS for the products it sells in an effort to
lower costs. For example, Wal-Mart developed a
company-wide computer system to link information from
cash registers to firms in its supply chain, thus greatly
facilitating inventory management. The integration of the
system and the distribution system meant that customers
would rarely encounter out-of-stock items and to reach
the quick response. Further, the use of scanners at the
checkout stations eliminated the need for price checks. By
Kmart’s own admission, its employees were seriously
lacking the skills needed to plan and control inventory
effectively [5]. These brief examples highlight the
diversity and importance of VDS. Great many societal
changes inevitably involve in VDS. There is great
pressure among competing nations to increaseglobal
productivity. Businesses are on a national crusade to
improve quality and speed of their offerings in both
products and services. As we will see, increasing
productivity of the firm and value-added to customers are
primary objectives of the VDS.
Technological change is an important consideration.
Technologies such as e-mail, laptops, personal digital
assistants, e-commerce, are profoundly affecting business
and are fundamentally changing the nature of today’s
work. Many banks are shifting their focus from building
new branch locations to using the Web as a way to
develop new customer relationships and transaction
processes. Banks rely on technology to carry out more
routine activities as well, such as transferring funds
instantly across cities, states, and oceans. Other industries
also rely increasingly on technology for efficient,
effective and secure processes, e.g., RFID used to control
logistics activities, electronic data interchange and
integrated information system of the same server of
database and planning system.
Since the early nineteen 70s, many literatures
represented how to shorten manufacturing process time in
supply chain operation, such as Vinson, C.E (1972) [16]
discussed costs of ignored lead time uncertainties in
inventory phase. Das, C. (1975) [4] given a static analysis
to lead time effect on inventory. Szwarc, W. (1971) [14]
paid attention on time management in transportation.
Stalk, G. Jr, published a milestone article named ad
“Time-the next source of competitive advantage” in 1998,
he first put forward the word of “time-based competition”,
the paper is early discussed under the instantaneous
competition (IC) in details, not only analyzed the
evolving process of competitive pattern, also discussed
the importance of time by way of competitive advantage’s
core resource and described the essence of those such as
instantaneous manufacture, instantaneous sale,
instantaneous distribution, instantaneous innovation and
strategy etc. Stalk, G. Jr and Hout, T.M., (1990) [13]
expatiated the instantaneous competition in-depth,
analyzed its relationships among business, financing,
customer and innovation, pointed out using least time,
lowest cost to supply maximal value is a successful
business pattern, besides, the instantaneous competition
needs supply new products which satisfying customer’s
demand rapidly and having competitive quality and cost.
Certainly, the instantaneous competition has an important
strategic meaning, since it can reach the following
objective: adding the enterprise productivity; increasing
product price elasticity; lowering the enterprise risk;
enlarging the market possession. Gattorna John (2003) [9]
based on financing explained compressed time strategy
result in value, with eye on the customer service,
customer response, balance in supply and demand,
inventory. In China, research on the instantaneous
competition emphasized its strategy combining with
supply chain. From operational viewpoint, Yanhui Li and
Shihua Ma (2005) [18] designed a distribution system to
minimize the total responding time other than the delivery
cost in the instantaneous competition environment and the
multiobjective non-linear programming model for the
instantaneous competition distribution system was
constructed with certain assumptions as premises. [11]
Based on analysis of the insufficient plan pattern which is
widely used, a new plan pattern, predict-order pattern in
supply chain was proposed for the instantaneous
competition. Predict-order pattern aimed to shorten multi-
stage response time, and made node enterprises in supply
chain link up business information and determine plans in
advance. Yuxing Han and Xiaowei Liu (2004) [19]
considered the instantaneous competition environment,
analyzed safety stock management of supply chain
companies involving cost optimization and time
optimization, and set up a safe stock management system
based on lead time through analyzing the relations
between safe stock and lead time. Qiufang Fu and Shihua
Ma (2005) [10] studied instant customerization supply
chain management pattern based on IC. Xiao Zhou et al.

Value Delivery Systems under the Instantaneous Competition
31
distributed the quick-responded logistics pattern should
be improved lies in the logistics of manufactures and their
downstream enterprises, illustrated four kinds of logistics
patterns that have great significance to shortening the
response time of the final customers, which are the
directly-sale pattern based on the manufactures, the
retailer-supported wholesale logistics, the synthesized-
wholesale logistics patterns which supporting districts
retailer, and the alliance pattern of producing and retailing,
and have their own adaptive environment, which
depending on the operation character and the industrial
character of SC. Thus it can be seen, most of literatures
studied the instantaneous competition is based on supply
chain management, and that A.Lockamy Ш (1993) [1]
analyzed the lead time management based on product
delivery system, set up a conceptive model to manage
how to reducing lead time for manufacturer VDS, and
depending on 6 world-wide manufacturers. We can know
this article is early to refer delivery system based on the
instantaneous competition.
In this paper, the necessary conditions and the
components of the operation of a VDS under the
instantaneous competition are analyzed; the every node
enterprises in a VDS to make clear that the function of
each of them in the value creation and addition are
discussed. We firstly discuss the operational frame and
classification of the VDS under the IC. Secondly, we
analyze the tactics of the instantaneous competition in
supply chain system and the marketing system, both of
which compose the whole VDS. Thirdly, we analyze
some factors that must be controlled in a VDS. Finally,
we set up a multi-objective optimization model, which is
a mixed-integer nonlinear programming problem. And a
case study illustrates our conclusions.
2. The Missing Elements and Process Models
in the VDS
The term operation is often applied loosely in business,
and can mean anything from a firm’s facility, to a VDS,
to a process, to an activity, to a formal functional
organization of people. Recall that a VDS’s definition,
clearly, some of these processes are officially part of the
operations functions, but there are likely other processes
in a VDS that fall under other functional areas within the
organization and within other organizations in the supply
chain. For instance, we may view General Motors’
Cadillac line as a VDS that includes assembly processes
as well as processes in marketing, R&D, engineering and
finance within its organization. Examples within GM
include: (1) Marketing processes that introduce to
customers the new season’s Cadillac configuration; (2)
Design processes responsible for engineering detailed
features for that configuration; (3) Assembly and test
processes within operations, and (4) Sales processes
responsible for finished good distribution, demand
forecasting and promotions.
Unfortunately, most firms manage processes Depart-
mentally, without recognition and concern for the entire
VDS. James Harrington (1991) [7] explained the history
and reasons for broken processes so prevalent in
businesses today. A VDS and its associated processes
were first developed out of a need to provide a family of
products or services. In most companies, these needs
arose when the business was young and growing. They
were developed quickly to meet an immediate need to
marshal a small internal population to serve a small
customer target base.
After that meager beginning, the processes were
Neglected and ignored. They were not updated to keep
pace with the business environment. No one took the time
to review and refine them. As business grew, disparate
new products and services value-added, but most likely
provided by the same processes. Responsibility for these
processes was divided among many departments, and
additional checks and balances were instituted as small
empires grew. Little pools of bureaucracy began to
develop. Two, three, or even four replaced one signature.
Bureaucracy became the rule rather than the exception.
Patches were put on top of patches. No one really
understood what was going on, so no one could audit
business processes within VDS to ensure that they were
operating correctly. Along the way, the focus on the
external customer was lost. The firm became more
inwardly focused, and people did not really understand
the impact of their activities on external customers.
Consequently, many business processes became in-
effective, out of date, overly complicated, burdened with
bureaucracy, labor intensive, time consuming, and
irritating to management and employees alike. While
most firms accepted these processes as a necessary evil,
they have turned out to be millstones around the
organization’ neck that increasingly hamper its ability to
compete. James Harrington (1991) [7] represented that
between 40 and 70 percent of all white-collar support
effort in manufacturing adding no value to customers.
Eliminating white-collar errors and bureaucracy can cut
overhead costs by as much as 50 percent, make a firm a
leader in its field, and greatly improve response time,
quality and cost of products to customers.
It is no wonder that in practice, important decisions
made by a firm bear little or no relationship to their stated
or official business strategy-even if the firm regularly
conducts what it considers a rigorous strategic planning
exercise. One important reason is that firms tend to seek
strategies that are uniform in nature. This offers apparent
clarity in the form of consistent strategic statements that
are easy to express, explain, and address. A desired level
of uniformity has inherent attractions no matter what the
company’s scale. It is not surprising then that typical
expressions of corporate strategy include such general
terms as low cost, differentiation, balanced scorecard, and

32 Guo-Jun Ji
4 critical success factors. The use of general terms such as
these blur rather than focus the firm on differences in
markets that are increasingly characterized by difference,
not similarity, and it brings conflicting demands on the
operations function.
Unless strategy statements translate into actions and
result in incremental or radical improvement in the VDS,
they are of little value. Markets are characterized by
increasing difference. Companies replace annually some
10 percent of existing sales revenue with “better” margin
business [15]. The key to understanding markets,
therefore, lies in being able to identify and integrate this
new business into a new VDS. Because the needs of the
market segments differ, decision priorities likely differ by
market segment and VDS. A clear and accurate
understanding of a company’s markets arises from facts,
data and ongoing discussions of strategic options
involving all functions and process stakeholders within
VDS. Firms must stop thinking functionally, and start
thinking about markets served, and the VDS and
associated processes that need improvement. World-class
firms continuously strive to provide superior products and
services to their target customers. Now, we will discuss
the business process improvement steps. The general
approach advocated in this paper is called business
process improvement. It provides an objective method for
segmenting markets, uncovering customer needs and
developing a means to profitably satisfy those needs
through the creation or improvement of critical processes.
Business process improvement embodies the following
principles: (1) Linking improvement efforts to the needs
of target customers, ensuring constancy of purpose; (2)
Working on a manageable number of projects,
emphasizing improvements to critical processes within
value streams with the greatest potential for improvement
and profit; (3) Using facts, not speculation, based largely
on data collected or logically inferred from customers and
other stakeholders for selection and direction of
improvement projects; (4) Pro-actively considering
creation and improvement, as well as correction.
Business process improvement efforts may well
involve and impact people within every functional
department in the VDS. It is therefore time consuming
and ongoing. A business process improvement initiative
should be directed to a specific target market, its VDS
and critical processes etc. It involves three basic steps:
(A) Determine the process intent
Process intent is a clear statement of what the VDS is
intended to do-create value of customers, of course, but
specifically who is the customer, what type of value is
needed, and by how much additional value [14]. Unmet
needs continually arise between what customers require
and what the firm currently delivers, and these needs may
be expressed in general terms, e.g., missing or inferior
aspects of the bundle of products/services that comprise
the offering, a price too high relative to perceived value in
the marketplace, or some shortcoming concerning
response time in delivering the offering. If the firm
expects loyalty from its customers, these needs must
somehow be satisfied by the firm’s VDS and associated
business processes. Thus, to improve the VDS, it is
essential to first understand exactly who the customers are
(target market profiles) and what they need. Expressed
needs or latent needs of customers may be uncovered in
various ways. It is important to understand not only the
unmet customer needs but also the importance of each
need, since the firm should focus its limited resources on
satisfying the most important ones.
(B) Develop the process model
A process model is a detailed statement of how work
should be divided in the VDS to satisfy the process intent
(the process model would be best labeled the “VDS
model”). In fact, there are no universally optimal ways to
organize work, but there is one way to organize work to
satisfy the particular process intent. Unmet customer
needs can be satisfied through development or
improvement of one or more processes within the VDS.
Critical processes in the VDS must be identified and
understood. If critical processes already exist they should
be dissected to uncover opportunities for improvement.
Regardless of whether or not a process currently exists, it
is important to benchmark other firms with similar
processes that are considered world-class to discover their
best practices. With this analysis, a process model which
best conforms to the process intent may then be
constructed.
(C) Establish the learning and improvement system
The abovementioned covers how to establish continual
learning and improvement within the “process model”.
Learning and improvement involves three sides: (1)
Organization and management of change. The process
model analysis conducted in (B) above should yield a set
of actionable, prioritized recommendations as to how to
profitably achieve the “ideal-state” in the VDS.
Implementation of these business process improvements
requires effective organization and management. (2)
Feedback and control. This entails monitoring progress of
the business process improvement endeavor against the
performance targets, and taking corrective action if
necessary. Feedback and control should occur during
implementation and after implementation during
execution. (3) Standardization. It is important to
document standard work practices established in business
process improvement efforts and communicate the
knowledge gained to other parts of the business.
Furthermore, business process improvement on one
aspect of the business may have been unsuccessful, yet
the firm may have gained if the lessons can be shared
elsewhere.

Value Delivery Systems under the Instantaneous Competition
33
Process intent (is commonly known in marketing
circles as a value proposition) is a clear statement of what
the VDS is intended to do, a strategic direction for the
firm’s management and employees as well as position
statement for target customers on the role of the VDS.
According to Terry Hill (2000) [15], clear process intent
rarely occurs in practice, and unclear process intent
causes confusion for customers, managers and employees.
Many companies mistakenly assume that particular
products or services compete in the same way in different
markets, thus, failing to recognize how business is won.
In today’s competitive markets, customers and
potential customers demand increased value from the
firm’s offerings. Unmet needs are gaps that arise between
what customers require and what the firm delivers. If the
firm expects loyalty from its customers, these needs must
somehow be satisfied by its VDS. To improve the VDS, it
is essential to first understand exactly who the target
customers are, what they need, how much they are willing
to pay to satisfy this need, and what the impact will be on
sales and profits. A firm must understand the importance
of each need and focus its limited resources on fulfilling
the most important ones. There must be a means to
translate needs as customers express them into company
language. That is, the external process intent must be
translated into the internal process intent. Internal process
intent relies on performance characteristics, design
specifications and performance measures, and
performance targets to describe the unmet needs in terms
the company can measure. Figure 1 illustrates those steps
involved in preparing the process intent.
A process model is a detailed statement of how work
should be divided to satisfy the process intent. Figure 2
represents a logical set of steps in developing a process
model. The first is to construct a process map that
identifies major processes within a VDS. Second, critical
processes are identified whose creation or improvement
would enable us to satisfy the process intent. Processes
should be dissected and analyzed to uncover opportunities
for improvement. We do this using a lean audit and
process benchmarking. A lean audit looks internally at
existing processes, while process benchmarking looks
externally at existing processes or ones that need to be
created. In addition to a statement of the process model, it
is also important to establish within the process model a
set of actionable, prioritized recommendations as to how
to achieve the process intent in a profitable manner and
stay there.
3. VDS under IC
A VDS under IC has quite sensitive to time. Mostly, the
meaning represents as follows: The market demand
change along with product’s life cycle, such demand
change can be described by the product’s life cycle curve;
With the market demand changing, product’s price will
fluctuate in time progress, which will directly influence
the revenue of a VDS and members in the system; The
marketing strategy can alter product demand, usually add
product value and improve product delivery efficiency.
In market economy, a VDS is enclosed customer, is
based on a supply chain and a marketing system. Namely,
it is a complex system that responding market demand
rapidly, its objective is to create maximal value for
customers and node enterprises of the system. Different
product types correspond to different VDSs. When
product is sensitive to time, whether it is functional
product or innovative product, often needs to utilize the
IC strategy in a VDS. Moreover, some requirements are
necessary for a VDS under IC, such as all nodes linkage
effect, operational effect, response ability and value-
added ability etc. When the functional product is sensitive
to time, its market demand and price are all influenced by
itself lifecycle and seasonal demand markedly, such as
milk, fresh vegetable, etc. To furthest achieve the product
value, meet market demand, the VDS must adopt IC
strategy, as soon as possible shorten lead time and process
time of all nodes to guarantee product delivered to
customer in the determinate time window and in optimal
status.
Innovative product usually is sensitive to time, the
reason includes: At the initial period of product
introducing, the firstcomer can become monopoly
absolutely, results in node enterprises in a VDS can gain
the excess profit. For example, to newly SARS bacterin
introduced to market, one branch price is 30 to 50 times
higher than its costs. In fact, this is why enterprise “get
rid of the stale and bring forth the fresh” continually; To
winning time advantage, enterprise must take the lead in
technology, its product standard and technical criterion
are strongest likely first impressions, it evolves the
correlative industry cognized uniform standard, compels
aftercomer must accept the standard, then becomes the
follower of lead enterprise. And that, the uniform
standard will settle the lead enterprise in the steady core
position among their industries, then virtually would
improves their competitive ability; In a supply chain,
member enterprises want win time advantage early can
still setup their supply network and sale network, take the
lead in taking possession of resource advantage, develop
well sale channel, in this way, result in stronger support in
organizing production and sale; From marketing
viewpoint, early introduced market product which its first
impressions are strongest. In competition of subsequent
alike product, generally, customer is apt to select the
brand-loyal product, since by long time chastened in
market, such product is more mature, and the relative
service is more perfect.
When a VDS is under IC, then all members of the
system should recognize IC as the accordant value
proposition, i.e., strategy of nodes is regarded as their

34 Guo-Jun Ji
Figure 1. Preparation o f p rocess inten t
Develop process map (or value stream map)
Choose critical process(es)
QFD data Other factors
-Customer attributes -Constrains system performance
weights & Comp. Anal. and impacts profit
-Characteristics, targets -Feasible (affordable over lead
weights & Tech. Anal. time)
Conduct lean audit of existing
critical process(es)
-Valueless activities
-Valueless time
-Valueless variability
Benchmark existing process(es) or
process(es) to be created
-Project launch
-Team preparation
-Tour
-Analysis and adoption
Transform process(es) using learning
and im
p
rovement s
y
stem
Figure 2. Development of process model
Develop external process
Segment to derive target market
Uncover unmet needs of target customers
(
articulate
d
- latent
)
Competitive Characteristics Value proposition and/or
Customer attributes
-Service bundle
-Price
-Response time
-Single thought breakdown
Drive impact on sales
Elasticity Priorities
-Qualifiers of customer
-Business winners attributes
Develop internal process intent using QFD
Performance characteristic: Design specifi-
cations; Process metrics
-Correlations among: Attributes & Characte-
ristics
-Values: Current values; Target values
-Performance characteristic priorities
-Competitor analysis
*Customer attributes
*Performance characteristics
Strategic fit?
-Core capabilities
-Value discipline
*Operational excellence
*Product leadership
*Customer intimacy
Yes
Proceed to rocess
model
N
o
-Abandon need?
-Eliminate offering?

Value Delivery Systems under the Instantaneous Competition
35
active rule must be under IC. Otherwise, time competitive
advantage created by the upper stream enterprises, can be
weakened by other nodes, which counteract even delay
the product value realization time, then result in
aftereffect would be not only wasteful, but also lose the
market opportunity due to missing competitive advantage.
Therefore, setup the accordant value proposition actually
means that the strategic disposer and layout in members
of the supply chain come down in one continuous line.
This can reach from the following: (i) Philosophy of IC is
rapid response to customer’s demand. Enterprises under
IC must optimize their process, adjust operation joined
border upon nodes, and respond to the uncertain market
demand agilely by shortened lead time. However,
implementing IC is not simply shortening the process
time among nodes. Moreover, the whole system must
consider IC costs in node enterprises, utilizes the
scientific layout and the detailed analysis to determine the
relative strategies, tactics and scale of reducing process
time for any nodes. (ii) All members in the system must
have enough production capacity. Nowadays, since
product is often sensitive to time, business opporunity is
fleeting. So, members of the system must be likely to
production sufficient product to fill market. In this
competitive rule, whose operational time is shorter and
sold product is greater, who will becomes a winner in
competition market. (iii) IC needs integrate the
enterprise's abilities. G. Jr. Stalk and Alan M. Webber
(1993) [13] ever described IC existed latent risks, and
Von Braun, Christoph-Friedrich (1997) [20] expounded
the speed trap resulted in the negative effect on IC. No
reason, endless reducing time will result in increasing
cost largely, and virtually quicken regenerate product
speed, shorten product lifecycle, instead go against profit
gained by product value realization.
4. Operational Flowchat of the VDS under IC
Generally, the dominance built based on IC can actualize
as follows: Time competitive strategy is driven by
customer demand, i.e., according to customer demand
fluctuation, enterprise rapidly adjusts its actions such as
design, production, sale, etc., to meet customer demand at
best times and largest released value; Time competitive
strategy oriented in technological innovation, i.e.,
enterprise via the rapid innovation mechanism, deduces
new product introducing time, takes possession of market
at best times and maximal output, such pattern behaves
obviously in updating speed industries such as IT and
mobile telephone; Time competitive strategy oriented in
marketing. One side because product lifecycle is more
and more shorter, which needs enterprise to quicken
product sale speed and decrease depreciating losses, on
the other hand, enterprise improves product sale speed
result in circulative speed decreased, warehouse stock
costs reduced, members’ turnover speed increased and
gained higher revenue in a VDS. Therefore, different
node enterprises in the VDS undertake the different tasks
under IC, and they need to implement the different
strategies. Commonly, considering the operational
characteristics of nodes, the VDS under IC is divided into
4 modules, i.e., instantaneous design, instantaneous
manufacturing, instantaneous sale, instantaneous service.
The operational flowchart of the VDS under IC is
illustrated in Figure 3.
The instantaneous design indicates via reduced product
design period, improved the transform speed from
concept to real product, based on technological
innovation, to reach product competitive advantage,
which can be realized from the following: In the different
phases ofnew product development process, enterprise
needs control and reduce the interstitial time among
processes, as the possible as shortens time, such as time
covered in redeployment, combination and process of the
setup team, etc; The different types of product
development organization will effect on time reduced, for
example, some of organizations invite other members to
participate in the R&D projects, such as supplier, the
relative technological personnel in production department,
seller in final market so many as retailer, improve the
knowledge sharing between the design department and
others; Enterprise must makes use of the computer
auxiliary technology.
Product design process would result in value creating
process, but its contribution to value creation occasionally
limits in conception, yet no scale value realization or
value-added. The instantaneous manufacturing mostly
utilizes the competitive strategy based on customer
Figure 3. The operation al flowchart of VDS base d on IC
Instantaneous
design
Instantaneous
manufacturing
Instantaneous
service
Supplier Manufacturer Distributor Retailer Market
Instantaneous
logistics
Instantaneous
sale

36 Guo-Jun Ji
demand. According to the different product types, the
detailed operational measures are incomplete similarity.
For instance, the fun-ctional product always use JIT
production pattern, the innovative product is suitable the
rapid responsive operational pattern, and that the virtual
operation provides more flexibility and more agility for
the VDS. The instantaneous sale indicates decrease
product no value-added time in circulation to the best to
enterprise’ abilities, such as stock time, distribution time,
etc., the same as the instantaneous service, enterprise
must follow out the time competitive strategy based on
sale. If product can not deliver to customer in time, or
does not sold and become finished goods stock, then JIT
production will lose its significance. The instantaneous
sale objective not only leads up market, enterprise
becomes a leader in market, but also increases turnover
speed, then deduces the period involving in product
transforming profit to create more value. Herein,
enterprise needs reengineer channel, makes the sale
channel is so flat that enterprise and consumer are easy
communication directly, and improves factor control and
radicalization to the distribution channel. Nowadays,
along with computer network and information technology
development rapidly, market has already entered E-
business times, online transaction is on popularization, in
this way will result in both sides sale information transfer
promptly and reduce the process time of product sale at
greatest degree. The instantaneous service means that
response to customer service demand rapidly, i.e.,
supports knowledge transfer and technology be used in
the fore-and-aft product sale widely. Enterprise responds
to customer service in the customer’s forbearing time, can
maximize customer value, then can keep customer loyalty
and realize the product brand value. The instantaneous
logistics mainly means that decreasing the needless
waiting time and process time among nodes. In the VDS
based on IC, enterprise should introduce the new
operational pattern such as third party logistics, fourth
party logistics, to improve the linkage effect among
enterprises and increase product competitive advantage.
In addition, to some products, enterprise in order to win
the time advantage, can introduce the merge-in-transit
strategy or postpone logistics strategy to change process
from the tradition non value-added process to value-
added process.
In fact, build inventory in anticipation of demand
makes life so much easier for manufacturers, despite all
the troubles that inventory management gives them. It is a
luxury that many service enterprises envy. Management
of a service enterprise often has to guess what demand
will be and then establish its capacity, within fairly
narrow limits, to meet that demand. If demand falls below
projections, the enterprise suffers the pain of having to
pay an excessive investment in capacity (e.g., facilities, or
equipment). If demand exceeds the projections, then the
enterprise loses revenue and contribution to profit. It can
be a tricky business. A restaurant for example, must have
sufficient capacity upon first opening, or risk a loss of
goodwill, a deathnell for new sites. Generally, there are
two ways to resolve these problems: adjust supply or
adjust demand. We will discuss the two ways in detail.
Firstly, let us consider supply management issues.
Under IC, a chief consideration for the management of
supply chain within a VDS is to make sure there is
enough capacity at the peak to response to customer
demand rapidly. For many businesses, the peak period is
a critical one for the financial health of the company.
Retailers at holiday are not the only ones for whom the
results of the peak times toll either joy or gloom.
Accountants experience a busy season in the spring.
Florists have six holidays that are critical. Other
businesses face busy times on selected days of the week
or at selected hours of the day such as lunch breaks and
after 6 P.M. It is mandatory to prepare well for the peak,
whenever it occurs. The supply of capacity in services
may be adjusted in three general ways: shifting resources,
changing resources levels, and changing the structure of
the system.
Shifting resources: Shifting resources is most effective
when there exists a scheduling problem, not a capacity
problem, i.e., there is sufficient capacity overall, but it
does not match the seasonal demand pattern. One way to
deal with a scheduling problem is to shift the schedule of
existing resources to cover peak loads to meet customer
demand quickly. To the extent that the demand for
services can be forecast or managed, the staff-start times
and breaks can be adjusted accordingly. Of course, staff
schedules must conform to work rules of unions,
company policy, day-care considerations, etc. Another
way to deal with a scheduling problem is to schedule the
most productive employee. For this reason, fast-food
restaurants schedule their best crews for their peak hours
each week and renew services schedule their best workers
at bottleneck activities during their peaks to deliver their
value rapidly.
Changing resource levels: When there is a capacity
problem, to win the IC advantage, changing resource
levels becomes a viable option. To increase capacity
usually involves adding resources (such as space,
equipment, materials, or worker). In many services, the
most controllable resource is worker. Worker may be
acquired by hiring full-time or part-time workers, or by
using overtime. Some services are constrained at peak
times not by worker but by space or equipment. Here is
where short-term rentals or borrowing can help. For
example, airlines during peaks have been adopted to rent
additional planes. The same is true for trucking firms or
for warehousing operations, particularly if the peak is not
expected to last very long. A decision to acquire resources
implies deliberately investing in more capacity at the peak
than is necessary for other times. Of concern, naturally, is

Value Delivery Systems under the Instantaneous Competition
37
paying for the resources. There are two ways to justify
such excess: (1) Margins earned at the peak. Peak times
may be so lucrative or the costs of setup excess capacity
may be so cheap that it pays for the service to exist with
excess capacity for the rest of the time. At it turns out,
many service organizations are judged by customers on
their ability to handle peak loads. Concern halls,
amusement parks, golf courses and gymnasium are classic
examples; (2) Countercyclical service. Some service
facilities have multiple uses. Ski resorts that double as
summer resorts are this examples, their size is dictated by
the ski peak, but funded in part with summer resort
revenues. The economic justifications behind these two
scenarios are complicated. The duration of the peak, the
prices that can be charged, the costs of maintaining the
facility, the costs of operating it, and the off-peak demand
and prices must all be considered.
System restructuring: Whatever the system capacity, it
is important to use it to the fullest under IC. There are
several ways to restructure a VDS based on IC: perform
activities concurrently, combine activities, standardize
service pathways, untangle work flows in the layout,
create cells, perform triage, provide support, and educate
customers. (a) Perform activities concurrently: Sometimes,
improvements in the rapid response to customers can be
made if different resources perform tasks concurrently.
For example, a credit card check may be performed
concurrently while customer-mailing information and the
order are processed. Even in cases where the same
amount of work needs to be done, performing activities in
parallel can shorten the customer’s flow time. (b)
Combine activities. Opportunities to combine similar or
sequential activities may also be encountered. By
consolidating multiple activities into one and performing
the activity by one set of resources, the system may
benefit from shorter processing times and queue times.
Using the example above, combining activities of credit
card checks, gathering mailing information and order
processing allow one worker to perform them in series
without delay in-between. In the case of concurrent
activities, different workers would perform them in
parallel. © Standardize service paths. Some customers,
types of customers or customer orders may follow
different paths through the same set of activities. These
paths are called patient pathways in healthcare, service
paths in other services, and part routings in manufacturing.
The system can become much more orderly and efficient
by rearranging some pathways so they all follow the same
route, and increase the IC advantage. (d) Untangle work
flows in the layout. Once the paths are standardized, we
may discover opportunities to change the layout within
the process so that customers or orders flow in the same
direction through the resources. Logical and physical
flowcharts often are effective in identifying tangled
workflows. For instance, logical flowcharts may reveal
similar pathways for different types of customers, when a
physical flowchart may show how they are processed
within conflicting, tangled flows. By changing resources
around, businesses may be able to untangle these flows,
then reducing travel time for customers, orders and
workers, i.e., improving enterprise IC ability. (e) Create
cells. Here cells mean that a natural extension of
linearizing pathways and untangling workflows. A cell
includes a set of resources that is dedicated to similar
customers, customer types or customer orders. Within the
dedicated cells, workers and equipment are co-located
within close proximity, and customers follow the same or
similar workflows. Cells may decrease the variation of
work arriving at any particular cell and permit similar
customers to be served more rapidly than they otherwise
would. Reductions in processing time and variability are
possible because of increased homogeneity of work and
added learning by workers. Generally, the staff within a
cell should be cross-trained as much as possible to
facilitate efficient processing and flexibility. It is
important to note, however, that resources dedicated
within cells, are usually unavailable to “help out” on work
across cells. Therefore, learning within cells must be large
enough to offset the loss of pooling across cells. (f)
Triage. Triage mechanisms can serve to route customers,
customer types or customer orders to appropriate cells.
Triage mechanisms are widespread at present, especially
“touchtone triage,” where we are asked to press “1”
stands for one need, and “2 if our needs are something
else. Triage, from the French word for “sorting” was
originally a medical concept where a triage specialist
decides whether a doctor or a nurse treats a patient. (g)
Provide support. Workers need proper support to perform
their jobs. A nurse may be more efficient if the right
information, supplies, and assistance are provided at the
right place and time. Additionally, circulating
performance data, such as the number of patients treated,
may in certain circumstances provide feedback and
incentive to improve mean service time, service
variability and conformance-to-standards. (h) Educate
customers. Another mechanism that can effectively
increase capacity and rapid responding time is to educate
customers as to how to follow desired behavior. For
example, a message may inform a caller when waiting on
the telephone to have her order number and mailing
address ready when a representative answers. An airline
might benefit by informing people in line at the ticket
counter to have a picture ID ready for security purposes.
(i) Customer participation. Still another mechanism that
can increase capacity and responding time is to persuade
customers to do things for themselves. Hence, restaurants,
during their peaks, may schedule a buffet service. In so
doing they relinquish control over the portions provided
people, but they can save substantially on the wait staff
and kitchen help than they would otherwise require.
Next, we will discuss the management of demand
appeared in a VDS based on IC. The key to demand

38 Guo-Jun Ji
management will alter the behavior of customers, shift the
timing of demand, so that the peak is “shaved”, and the
off-peak times, with their excess capacities, are fed more.
Sometimes, this can be done directly, and other times it
has to be done indirectly.
·Direct management of demand
The direct management of demand involves the
following ways. (1) Deny service. It is often better not to
accept business than to surprise customers with long waits.
In the absence of input from the company, customers may
decide to leave the system. In queuing terminology, a
customer who encounters a long line may decide to leave
(balk) before entering the line, or to leave (renege) after
some time in line. Some service businesses encourage
balking by designing waiting rooms or queue structures
that allow only a certain number of customers in the
system. (2) Reservations. For many services especially
those with high intrinsic value for the customer, demand
can be managed by introducing a reservation system.
Customers make reservations for travel on airplanes and
trains, particularly when supply is likely to be constrained.
Sometimes, reservations do more than simply ensure full
utilization of the service. They segment demand, then
squeezing more revenue out of the customer who hope a
better seat at a game, concert or plane, and generally,
better or quicker service. Reservations also act to regulate
the arrival of demand and to decrease its variability. As is
the case with service time variability, a reduction in load
variability can increase effective capacity and IC
advantage. Reservation systems cost money to install and
operate but they are effective and usually regarded by
customers as fair, particularly if the queue is managed by
a first come, first served rule or by a rationing scheme
whereby those who pay more are served first. Reservation
systems do require early, non-spontaneous action by
customers, and thus they are not well-suited to all kinds
of services. Certainly, reservation systems exist side-by-
side with first come, fist served non-reservation systems,
for instance, hotels, transportation, restaurants etc. This
nearly always occurs with services that have enough
excess capacity to accommodate walk-in business.
Customers here also recognize that those who have
planned ahead should be rewarded more than those acting
on impulse, if capacity suddenly becomes constrained. (3)
Yield management. Closely allied to reservation systems
is yield management. Airlines have done much to perfect
this technique. The objective of yield management is to
maximize the revenue that a service can realistically
expect. This is accomplished by offering “blocks” of the
service, with differing restrictions on them, at a variety of
price points. As reservations roll in, one can adjust the
size of the chunks of service offered t each price with the
goal of full utilization and maximum revenue. For
example, airlines offer a variety of prices for seats with
different restrictions. The lowest fares are limited in
number and require the passenger to book significantly in
advance, to stay a minimum amount for time at the
destination, and to forfeit a considerable sum of money if
the customer later desires a schedule change. Higher
fares carry fewer restrictions and offer the most flexibility.
Trying to maximize revenue in such situations, given the
uncertainty of demand and the absolutely fixed capacity
of the service, is an interesting dynamic problem. It is
amenable to mathematical programming solutions.
Economic solutions that equate the expected marginal
revenues across the fare classes have also been studied.
Most airlines and hotels, for instance, create a “threshold
curve” based on historical demand patterns over time. If
demand runs significantly higher than it has historically,
then one or more low fare classes are closed and demand
is forced into the higher fare classes. If demand runs
significantly behind, then the lower fare classes are left
open or expanded. Yield management, of course, requires
an absolutely accurate and timely control system so that
sellers have the best, most current data about the status of
demand and knowledge about which fare classes are still
open and which are either full or closed. It is no wonder
that yield management is essentially a product of the
information age. (4) Triage. Triage affects demand as
well as supply. In the military, triage usually refers to
battlefield conditions where the severity of patient
medical needs is assessed and priorities for treatment are
decided. Therefore, some cases are taken on immediately,
others wait, and still others are treated in a partial way.
For example, triage mechanisms in combination with
reservation systems permit airlines, to handle first-class
and business-class travelers more expeditiously than
coach or tourist class travelers who have paid
considerably lower fares.
·Indirect management of demand
Indirect management of demand includes persuading
customers who might ordinarily want service during peak
times to shift their demand to nonpeak times when there
is capacity or delay time to handle them. The indirect
management of demand focuses on the pricing and
service policies that companies can use as inducements to
customers. The detailed analysis is as follows. (1) Pricing
policies. Customers understand price. As long as demand
curves slope downward, lowering price is an incentive for
getting customers to buy more of what you have to offer,
and raising price will choke off demand. Raising prices
for peak times and lowering prices for nonpeak times can
work wonders for smoothing demand on the service
process. Electric utilities offer electricity for lower prices
if the peak days are avoided. Telephone company offers
cut rates in the evening and night hours. (2) Promotions.
Non-price service policies to shift demand are less
straightforward and often not as effective ad pricing
policies. They are frequently used in conjunction with
pricing policies. For instance, not only does the hotel
offer rooms at decreased rates on the weekend, but they
may throw in a free breakfast or a swim place in the hotel.

Value Delivery Systems under the Instantaneous Competition
39
(3) Alter customer expectations. Another non-price
mechanism has to do with a firm’s ability to influence
customer expectations about timing. Simple signs,
telephone messages or mailings that convey or future
response times and the reasons for potential delays
sometimes are enough to convince customers to wait.
Others may come back when they expect the system to be
less busy. And still others will go elsewhere or find
substitute services. Even in these cases of lost
contribution, it is better to inform customers ahead of
time of the delays than to suffer the bad will of angry
customers.
In a word, the suitable patterns of demand management
and supply management will result in many ways benefit
in the VDS based on IC, such as the maximum profit, the
rapid response to satisfying customers, more value-added,
etc.
5. The VDS Models Based on IC
Based on abovementioned, the VD involves the supply
system and the marketing system. The supply system is
base of the VDS, which form the value entity to respond
to the change demand; and that the marketing system
extends supply chain, not only searches and forecasts the
demand information, but also needs adjust the marketing
strategy and the sale environment to improve product
value and sale quantities, then gains the maximum
revenue of the VDS.
To sensitive time, the IC is a dominating strategy in the
VDS. Therefore, to study such system, time factor must
be taken into account the two systems (supply system and
marketing system), and integrates such two systems,
furthest develops market demand, so as to meet
customer’s demand, and maximize revenue. In this way,
the following models consider two ways: (1) Build the
model based on the marketing system. Using by the
lifecycle curve of product, approximately forecast
demand, and apply the advertising model and customer
service model to adjust and triage the demand change,
then based on the pricing model to find the pricing
strategy. (2) Setup model based on supply system. To
optimize the product flow and the operational time in
system, do best maximize value in the VDS, and compare
with different strategies to make decision.
A general supply chain that consists of three different
levels of enterprises is considered and showed in Figure 4
[Chen et al., 2003] [2]: the first level enterprise is retailer
or market from which the products are sold to customer
under the conditions subject to a given low bound of
customer service; the second level enterprise is
distribution center (DC) or warehouse using different type
of transport capacity to deliver products from
manufacturer side to retailer side; and the third level
enterprise is manufacturer that batch-manufactures one
product at one period. The fixed manufacture/idle costs
are also employed: on one hand, if the production line is
changed over to manufacture another product,
manufacture cost would be remained fixed; on the other
hand, if the production line is set up to manufacture one
specific product but actually is idle, the idle cost, also
fixed. Furthermore, the manufacturer has options of
manufacturing in regular time or overtime to satisfy the
customer demand. To simplify the problem here, we do
not consider the problem of purchase and inventory of the
raw materials in manufacturers nor incorporate the
purchasing cost into manufacturing cost. The research
region of this paper, therefore, is from manufacturer to
customer, like the dash line region showed in Figure 4.
And the other assumptions are similar to [2] and the
crucial difference was considered as follows: (1)
Additional considering the resources supply, the whole
supply chain extends from supply to the final market; (2)
In sale way, involves service costs, to describe the value-
added of a VDS.
Assume that
s
(Ss
∈
) is a supplier, m(Mm
∈
) is a
plant, d(Dd
∈
) is a distributor,
r
(R
r
∈) is a retailer,
c(Cc
∈
) is a customer, i(Ii∈) is a product, j(Jj
∈
)
is a resource,
t
(Tt
∈
) is a operational period.
Let i
rt
FCS denotes the service fixed cost when retailer
r
supply i product to c customer;
s
D denotes the maximum output of
s
supplier;
m
D denotes the maximum output of m plant;
r
D denotes the maximum capacity of
r
retailer;
i
rt
FHC denotes the fixed operational cost for
r
retailer;
j
s
FMQ denotes the average output of j resource
manufactured by
s
supplier;
i
m
FMQ denotes the average output of i product
manufactured by m manufacturer;
i
d
FMQ denotes the average magnitude of i product
delivered by d distributor;
i
r
FMQ denotes the average magnitude of i product sold
by
r
retailer;
sm
FTC denotes the fixed transportation costs when
s
supplier delivers resources to m plant;
md
FTC denotes the fixed transportation costs when m
manufacturer delivers product to d distributor;
dr
FTC denotes the fixed transportation costs when d
distributor deliver product to
r
retailer;
it
I∗denotes the inventory level at period t,
{} rdms ,,,∈∗;
d
MITC denotes the maximum input of d distributor;
j
sm
TCL denotes the maximum output when
s
supplier
supply j material to m manufacturer;
i
md
TCL denotes the maximum output when m plant
supply i product to d distributor;
t
TIC∗ denotes the whole inventory cost of
s
supplier, m

40 Guo-Jun Ji
Customers
Plants
Distributions Retailers
Suppliers
Figure 4. The supply system in the VDS MODEL
is a plant, d is a distributor,
r
is a retailer,
{
}
rdms ,,,∈∗ ,
where
{
}
rdmsIUICTIC it
Ii
i
t,,,, ∈∗= ∗
∈∀
∗∗ ∑;
j
μ denotes j material used in unit production;
it
UIC∗ denotes the unit inventory cost, where
{} rdms ,,,∈∗ ;
i
m
UMC denotes the unit production cost when m
manufacturer make i product averagely;
j
s
UMC denotes the unit production cost when
s
supplier
manufactures j material averagely;
i
m
UMT denotes the unit production period based on m
manufacturer makes i product averagely.
Some variables satisfy as follows:
j
st
o is a bivariate function, when
s
supplier invests the
excess j material, 1=
j
st
o, otherwise 0=
j
st
o;
i
mt
o is a bivariate function, when m manufacturer
overtime manufactures i product, 1=
i
mt
o, otherwise
0=
i
mt
o;
i
dt
o is a bivariate function, when d distributor via excess
investment to delivery i product, 1=
i
dt
o, otherwise
0=
i
dt
o;
i
rt
o is a bivariate function, when
r
retailer via excess
investment to sale i product, 1=
i
rt
o, otherwise 0=
i
rt
o;
1,it
∗
τ
denotes the production or operational time in unit
product at any period, where {} rdms ,,,
∈
∗
;
2,it∗
τ
denotes the logistics time spending on all nodes,
where
{}
drmdsm ,,∈∗ ;
i
SC
τ
denotes the lead time spending on service of
supplied i product;
j
st
OMQ denotes the j material magnitude of
s
supplier
overrun the average output, where
j
s
jts j
st
j
smt
Mm
j
st FMQIISQOMQ
s
−−+= −
∈
∑
1, ;
i
mt
OMQ denotes the output of i product overrun average
output by m manufacturer, where
i
m
itm i
mt
i
mdt
Dd
i
mt FMQIISQOMQ
m
−−+= −
∈
∑
1, ;
st
PS is the sale revenue of
s
supplier, where
∑
∑
∈∀∈∀
=
s
MmJj
j
smt
j
smst SQUSPPS ;
mt
PS is the sale revenue of m manufacturer, where
∑
∑
∈∀∈∀
=
m
DdIi
i
mdt
i
mdmt SQUSPPS ;
dt
PS is the sale revenue of d distributor, where
∑
∑
∈∀∈∀
=
d
RrIi
i
drt
i
drdt SQUSPPS ;
rt
PS is the sale revenue of r retailer, where
∑
∑
∈∀∈∀
=
r
CcIi
i
rct
i
rcrt SQUSPPS ;
j
smt
SQ is the magnitudes of
j
material delivered by
s
supplier to m manufacturer;
i
mdt
SQ is the magnitudes of i product delivered by m
manufacturer to d distributor;
i
drt
SQ is the magnitudes of i product sold by d
distributor to
r
retailer;
i
rct
SQ is the magnitudes of i product sold by
r
retailer to
c customer;
i
t
TCS is the overall relative service cost for i product at
t period;

Value Delivery Systems under the Instantaneous Competition
41
[
]
∑
∈∀
+=
i
Cc
i
ct
i
ct
i
sc
i
ct
i
c
i
tSQSQUCSFCSTCS ),(
τ
, where
),( i
ct
i
sc
i
ct SQUCS
τ
denotes the relationship among the
service cost of unit product and the lead time of unit
product, generally, when i
SC
τ
is more smaller, the service
cost of unit product is more higher, and more product are
delivered to market, more higher the relative service cost
is;
dt
THC is the fixed operational cost of d distributor at t
period, where
)),,()(( 1,
∑∑
∈∈
++=
Id
Dd
i
dt
i
dr
i
md
i
dt
i
dr
i
md
i
dt
Mm
i
dt SQSQUHCSQSQFHCTHC
τ
rt
THC is the fixed operational cost of
r
retailer at t pe-
riod, where
)),,()(( 1,
∑∑
∈∈
++=
ir
Rr
i
rt
i
rc
i
dr
i
rt
i
rc
i
dr
i
rt
Dd
i
rt SQSQUHCSQSQFHCTHC
τ
i
t
TLT∗ is the i product lead time among every node enter-
prises, 2,1,it
it itTLTTLTTLT ∗∗∗ +=, where
{} rcdrmdsm ,,,∈∗ ;
1,it
TLT∗ is the production lead time among every periods,
where
{} rcdrmdsm ,,,∈∗ ;
2,i
t
TLT∗ is the exterior logistics time among every nodes,
where {} rcdrmdsm ,,,∈∗;
2,
1,
1,1, )( j
sm
jts j
smt
j
s
j
smt ISQTLT
ττ +−=−;
2,
1,
1,1, )( i
md
itm i
mdt
i
m
i
mdt ISQTLT
ττ +−= −;
2,
1,
1,1,)( i
dr
itd i
drt
i
d
i
drt ISQTLT
ττ +−= −;
2,
1,
1,1,)( i
rc
itr i
rct
i
c
i
rct ISQTLT
ττ +−= −;
st
TMC is the overall production cost of
s
supplier at
t
period, here
)],([ 1, j
smt
j
st
j
st
j
st
j
st
j
s
j
s
Jj
st SQOMCOMQoUMCFMQTMC
s
τ += ∑
∈∀
where ),(1, j
smt
j
st
j
st SQOMC
τ
denotes the production cost
of j material manufactured by suppliers is relative to
j
smt
j
st SQ,
1,
τ
, s J denotes the set of materials supplied by
s
supplier;
mt
TMC is the overall production cost of m manufacturer
at
t
period, here
[
]
∑
∈∀
+=
m
Ii
i
mdt
i
mt
i
mt
i
mt
i
mt
i
m
i
mmt SQOMCOMQoUMCFMQTMC ),(1,
τ
where ),( 1, i
mdt
i
mt
i
mSQOMC
τ
denotes the additional product
cost of m manufacturer is relative to i
mdt
i
mt SQ,
1,
τ , m I
denotes the set of product manufactured by m
manufacturer;
)(tTPCmt is the procured materials cost by m
manufacturer, where j
smt
Ss
j
sm
Jj
mt SQUSPTPC
m
∑∑
∈∀∈∀
=;
)(tTPCdt is the procured cost of d distributor, where
i
mdt
MmIi
i
mddt SQUSPTPC
d
∑
∑
∈∀∈∀
=;
)(tTPCrt is the procured cost of
r
retailer, where
i
drt
DdIi
i
drrt SQUSPTPC
r
∑
∑
∈∀∈∀
=;
t
TTC∗ is the transportation cost committed in the node
enterprises, where
{
} dms ,,
∈
∗
;
()
(
)
∑
∑
∈∀∈∀
+=
s
j
MmJjsmt
j
sm
j
sm
j
smstSQUTCFTCTTC 2,
τ
, where
)(2,j
sm
j
sm
UTC τ
denotes the transportation unit cost
committed in
s
supplier distributed j material to m
manufacturer that is relative to the single batch
transportation time, more shorter time, more higher the
transportation unit cost;
(
)
∑
∑
∈∀∈∀
+=
m
i
DdIimdt
i
md
i
md
i
mdmt SQUTCFTCTTC )( 2,
τ
, the reason is
same as above;
(
)
∑
∑
∈∀∈∀
+=
d
RrIi
i
drt
i
dr
i
dr
i
drdt SQUTCFTCTTC )( 2,
τ
, the reason is
same as above;
(
)
∑
∑
∈∀∈∀
+=
r
CcIi
i
rct
i
rc
i
rc
i
rcrt SQUTCFTCTTC)( 2,
τ
, the reason is
same as above;
t
UCS is the unit cost committed in customer service,
which is relative to i
rct
SQ and i
rc
τ ;
i
dt
UHC is the i product operational unit cost of d
distributor, which is relative to i
mdt
SQ , i
rct
SQ and 1,i
dr
τ ;
i
rt
UHC is the i product operational unit cost of
r
retailer,
which is relative to i
rct
SQ and 1,i
rc
τ
; ),( 1, j
smt
j
st
j
st SQUMC
τ
is
the manufactured j material unit cost committed in
s
supplier excess investment, which is relative to 1,j
st
τ
and
j
smt
SQ ;
),( 1,i
rct
i
rt
i
rt SQUMC
τ
is the sold i product unit cost
committed in
r
retailer excess investment, which is
relative to 1,i
rt
τ and i
rct
SQ ;
)(tUSP j
sm is the price of s supplier sold j material to m
manufacturer, which is relative to material price and the
discount determined by the transaction between two sides
at
t
period;
i
mdt
USP is the price of m manufacturer sold i product to
d distributor, which is relative to the product sale price
and the discount determined by transaction between two
sides at
t
period;
i
drt
USP is the price of d distributor sold i product to
r
retailer, which is relative to the product sale price and the
discount determined by transaction between two sides at
t
period;
i
rct
USP is the price of
r
retailer sold i product to c
customer, which is relative to the product price in market

42 Guo-Jun Ji
at
t
period;
j
sm
UTC is the transportation unit cost when
s
supplier
delivers product to m manufacturer, which is relative to
2,i
sm
τ
;
i
md
UTC is the transportation unit cost when m
manufacturer delivers product to d distributor, which is
relative to 2,i
md
τ
;
i
dr
UTC is the transportation unit cost when d distributor
delivers product to
r
retailer, which is relative to 2,i
dr
τ
.
On the abovementioned assumptions, the objective
function of the VDS for i product satisfies:
{}
∑∈∗=∗rdmsWW ii ,,,,max
where )( j
st
j
st
j
st
j
st
JjSs
i
sTICTTCTMCPSW
ii
−−−= ∑∑∈∈
;
)( i
mt
i
mt
i
mt
i
mt
i
mt
Mm
i
mTICTTCTPCTMCPSW
i
−−−−= ∑
∈
;
)( i
dt
i
dt
i
dt
i
dt
i
dt
Dd
i
dTICTTCTPCTHCPSW
i
−−−−=∑
∈
;
)( i
rt
i
rt
i
rt
i
rt
i
rt
Rr
i
rTICTTCTPCTHCPSW
i
−−−−= ∑
∈
.
The constraints involve as follows:
(1) Manufacture constraints
Manufacturer constraints include three ways as follows:
(a) Throughput constraint satisfies j
s
j
smt
Mm
DSQ
s
≤
∑
∈
,
i.e., all of j material are manufactured by
s
supplier
supplied all manufacturers is not bigger than the
maximum output of
s
supplier;
i
m
i
mdt
Dd
DSQ
m
≤
∑
∈
, that is the magnitudes of i product
supplied by m manufacturer to all distributor, which is
not bigger than the maximum output of i product for m
manufacturer;
(
)
i
mt
i
m
i
m
jj
smt oOMQFMQSQ +=
μ
.
(b) Demand constraint: product introduced market at
period Tt− is not bigger than demand at t period, where
T
is the overall operational period in the VDS for i
product, i.e., i
t
iTtrc
IiRrCc
FCDSQ
ir
≤≤ −
∈∈∈
∑∑
∑
,
0 (this
constraint is available for other product flow).
Here i
rct
itFCS i
FCSi
itA i
Ai
i
tUSP
FSQFSQ
FCD ,,
θβθα +
=, where
i
A
θ
and i
FCS
θ
represents the decision variables, i.e., i
A
θ
denotes decision maker deems A advertisement effect on
demand of i product, i
FCS
θ
denotes service operation
effect on demand of i product;
itA
FSQ ,, itFCS
FSQ , are the sale value based on
advertising investment and service at
t
period;
i
t
α
a bivariate function, when run advertisement or
promotion, 1=
i
t
α
, otherwise 0=
i
t
α
;
i
t
β
a bivariate function, when there is relative service in
the system (for i product), 1=
i
t
β
, otherwise 0=
i
t
β
;
here Ss
∈
, Mm
∈
, Dd
∈
, R
r
∈, Ii∈, Jj∈, Tt
∈
.
(c) Transportation constraint:j
sm
j
smt
j
smt TCLSQ
φ =, where
,,,1,10 sm
Mm
j
smt
j
smt MSs ∈∀∈=≤≤
∑
∈
φφ i.e., j materials
supplied by
s
supplier to m manufacturer are not bigger
than the maximum transportation capacity supplied by the
supplier;
i
md
i
mdt
i
mdt TCLSQ
φ =,
where ,,,1,10 dd
Dd
i
mdt
i
mdt DMm ∈∀∈=≤≤
∑
∈
φφ i.e.,
manufacturer m distributed i product to d distributor is
not bigger than the maximum transportation capacity
supplied by the manufacturer;
i
dr
i
drt
i
drt TCLSQ
φ =,
where ,,,1,10 dr
Rr
i
drt
i
drt RDd
d
∈∀∈=≤≤
∑
∈
φφ
, i.e., i
product delivered by d distributor to
r
retailer is not
bigger than the maximum transportation capacity supplied
by the distributor;
d
M
mdt MITCSQ
dm
≤
∑
∈∀
,
i.e., all of product of distributor d which manufacturer
m supplied is not bigger than the maximum input of d
distributor, where MM d
∈
denotes the set of all m
manufacturers relative to d distributor;
d
Rr
i
drt MOTCSQ
d
≤
∑
∈∀
,
i.e., all of product of
r
retailer acquired from the relative
d distributor is not bigger than the maximum output of
d distributor, where RRd∈; here Ss∈, Mm
∈
,
Dd∈, R
r
∈
, Ii
∈
, Jj
∈
, Tt∈.
(2) Inventory constraints
∑
∈∀
−− −++=
s
Mm
j
sdt
jts j
s
j
s
jts j
st SQoOMQFMQII ,1,,1, , i.e., at
t
period, j material inventory of
s
supplier is based on
the remained inventory at pre-period plus j material at
present then subtract from all of j material delivered to
the relative m manufacturer, where MMs∈;
∑
∈∀
−− −++=
m
Dd
i
mdt
itm i
m
i
m
itm i
mt SQoOMQFMQII,1,,1, , i.e., at
t period, i product inventory of m manufacturer is
based on the remained inventory at pre-period plus the
manufacturing i product at present then subtract from all
of i product delivered to the relative d distributor,

Value Delivery Systems under the Instantaneous Competition
43
where DDm∈;
∑∑ ∈∀∈∀ −− −+=
dd
md Rr
i
drt
Mm
iTLTtmd itd i
dt SQSQII ,1, , i.e., at
t
period,
i product inventory of d distributor is based on the
remained inventory at pre-period plus the i product
distributed by all of the relative manufacturers then
subtract from all of i product delivered to the relative
r
retailer, where MM d∈,RRd∈;
∑∑ ∈∀∈∀
−− −+=
rr
dr Cc
i
rct
Dd
iTLTtdr itr i
rt SQSQII ,1, , i.e., at
t
period,
i product inventory of
r
retailer is based on the
remained inventory at pre-period plus the i product
distributed by d distributor at present then subtract from
all of i product sold to c customer, where DDr
∈
,
CCr∈;
∑
∀
∗∗ ≤
Ii
itMICI ; 0,≥
∗∗ it
itSQI , where
{} TtIiRrDdMmSsrdps
∈
∈∈
∈
∈∈∈∗ ,,,,,,,,, .
To the whole VDS, the overall period means that the
entire process time from supplier up to product/service
delivered to the final customer. It is summation of all of
the inner production/operational time and the logistics
time among all node enterprises. The production/
operational time among all node enterprises are illustrated
in Figure 5.
Next, we will consider those relative to time.
(1) Expressions of production/operational time among all
node enterprises
The production/operational time among all node
enterprises build up the fixed production/operational
setup time and the variable production/operational time.
Where the fixed production/operational setup time
involves those waiting time, such as the equipment
debugging, arranging personnel, machine warm-up etc.,
and that variable production/operational time is the
production/operational time of unit product multiply the
quantities of product. Then we have
2,
,1,1,
1, )( j
sm
jts jts
i
smt
j
s
j
smt IFMQSQTLT
ττ +−−=−− ;
2,
,1,1,
1, )( i
md
itm itm i
mdt
i
m
i
mdt IFMQSQTLT
ττ +−−= −− ;
2,
1,
1, )( i
dr
itd i
drt
i
d
i
drt ISQTLT
ττ +−= −;
2,
1,
1, )( i
rc
itr i
rct
i
c
i
rct ISQTLT
ττ +−= −.
(2) The objective function based on operational time of
system
The objective function based on operational time of
system satisfies:
},{},,,,{,min jircdrmdsmTLTTT t
i∈•∈∗=
∑
∗
•
∗
(3) Constraints
All of constraints are analyzed as follows:
1,
0,
1,
0j
s
j
s
ττ ≤≤ , where 1,
0,
j
s
τ
denotes the regular unit
production time of
s
supplier; 1,
0,
1,
0i
m
i
m
ττ ≤≤ , where 1,
0,
i
m
τ
denotes the regular unit production time of m
manufacturer;
j
s
j
s
j
sm
j
sFMQSQ ** 1,
0,
1,
ττ ≥;i
m
i
m
i
md
i
mFMQSQ ** 1,
0,
1,
ττ ≥;
0
1, ≥ i
d
τ
，0
1, ≥ i
r
τ
.
Based on above mentioned analysis and the economic
theory, the relative costs relationships are illustrated in
Figure 6. For example, the unit production/operational
time of all nodes is inverse proportion to the variable cost,
i.e., the production time of unit product is more shorter,
the invested resources need more, would result in the
production variable cost of unit product will increase. In
other words, the node enterprise’ production and
operational efficiency improved, response ability
increased, those are expense of increased production cost.
Therefore, considering the relationship among time and
value, time and cost, or the unit production time in all
nodes, these exists an optimizing value predicatively,
which result in maximum delivery value in the VDS
based on IC. The relative costs relationships are
illustrated in Figure 6 on the whole.
Supplier Manufacture Distributor Retailer Customer
Production
time
Logistics
time
Operational time
The overall operational time in system
Figure 5. The overall operational time in system

44 Guo-Jun Ji
Figure 6. The relationship between time and cost, product and cost
6. Case Study-the sport suit VDS
In this section, we consider all sport suit enterprises
typically selected from Quanzhou city in China. These
firms are divided into two VDSs, i.e., the sport suit supply
chain system or the marketing system.
(1) The sport suit supply chain system.
There are the following characteristics in the system: (a)
To raw material, such as pre-investment cost is more
higher, functional utilization is singularity, product type is
singleness, and usually quantities are more greatest, often
utilize pipelining, setup time is more longer, etc.; (b) To
color, material, texture, etc., such as raw material, semi-
finished product, finished product, all of these are easily
out of data, since their lifecycle is relative shorter. In fact,
fashionable dress will depreciate 0.7% every day, so long
as sold in advance 10 days may be depreciated 7%, then
can increase gross profit to 13%. (c) To product, such as
the raw material nature and the supply trait are concealed
the uncertainty of supply, quality and price, for instance,
the seasonal diversity, material tailored in different
regions, material growth environment, etc.From the
production process, there are characteristics as follows: (i)
There is uncertainty in output level and process time. For
example, some processes are just handled a single product,
i.e., thereafter, product is inhomogeneity. (ii) Production
efficiency if often determined by throughput. New
product are introduced in endlessly in today’s sport suit
industry, especially, diversification represents on design,
pigmentation and brand built up, etc. Pigmentation
belongs to the labor-intensive work (adding personnel or
necessary technological support results in improve
productivity), however, design, brand built up and more
others are difficult to control, because there are a great
deal of uncertainty in supply, quality, pricing and other
ways. Thus, one product often need the different “recipe”
to response to the different demand or the different
market, such as Pierre Cardin product have already
adopted the different strategies in different countries.
(2) The sport suit marketing system
The sport suit product is dominated by its brand, the core
thinking of brand management is using by those such as
the brand reputation, market development, sale channel,
R&D, production technological management, quality
control, information control, human resource, etc., form
the powerful attaching strength, would bring the exterior
Cost Sale
revenu
(a) Service level (b) Servicelevel
Unit
service
time
Unit transportation costUnit product service cost
(
e
)
(
f
)
Unit transp-
ortation time
Unit
operation
cost
Product
The unit operation cost
of Distributor/retaile
r
(c) The unit operation cost of
Distributor/retaile
r
(d)

Value Delivery Systems under the Instantaneous Competition
45
resources of nodes such as supply, production, sale into
the VDS, then result in improve the market outspreading
ability or the competitive ability.
The typical sport suit enterprise usually is based on
one famous brand or some of core product, carry through
development, production and management, and set up a
dynamic virtual organization in countrywide regions or in
global areas; the enterprise is based on production
management mainly, all members according to a
determinate cooperative strategy fulfill their chain’s tasks,
where their operational process emphasizes clear and
controllable collaboration; all allied enterprises are
relative independence in such organization, geographical
position is quite decentralization, so need a rapid smooth
information system to support enterprise’s operation. For
instance, ZARA in Inditex emphasized the time value.
Because the brand effect is obvious to the sale level, the
new incomer often spend much advertising fare or the
promoting fare to improve the well-known degree or the
brand value. Synthetically, the sport suit VDS has the
following characteristics: the virtual enterprise
management in dynamic league; information sharing
enough among the union members; agile supply chain
management; dynamic decision-making support.
Consider two sport suit brands but they have typical
product (e.g., sportswear) supply chain. The two VDSs
are illustrated in Figure 7, respectively. Where, the first
product I, a new incomer, the VDS consists of suppliers,
manufacturers, distributors, retailers and the final
customers. The unit product needs the relative materials
are 0.5 unit, the retailers of product I simultaneity sold
other product; The second product II, its brand is already
known very well, the VDS consists of suppliers,
manufacturers, retailers and the final customers. The
product is delivered by manufacturer directly to retailer.
The retailer supplies the monopolistic room.
Manufacturer of product II meets the customer
individuation demand by customization service. Via
optimization of the systems, we can compare to the
advantage and their operational effect of two product’s
VDSs. And in order to simplify the problem, we neglect
the fixed assets and apportion among the node enterprises,
and that do compare and control to the variable costs of
the systems, respectively. At the same time, assume that
the safety inventory in each node does not change with
period, so to control output and flux of each node, the
safety inventory of the two contiguous periods can be
counteracted. To logistics time among the nodes, once the
transportation mode and transportation route are
determined, its optimizing degree is often quite smaller.
Thus, we neglect the logistics time optimization.
Otherwise, the relationship between the operational cost
and operational time in distributors and retailers is often
in high-degree variable. So we will neglect the optimizing
result in the following model.
Table 1. The optimized results of product I
Product I value flow ($) W1 327400.0
Value created by the supplier
($) WS1 11900.00
Value created by the
manufacturer ($) WM1 164400.0
Value delivered by the
distributor ($) WD1 75577.14
Value delivered by the
retailer ($) WR1 75522.86
Materials supplied by the
supplier (piece) SQS 1000.000
Product manufactured by the
manufacturer (piece) SQM 2000.000
Product delivered by the
distributor (piece) SQD 2000.000
Product sold by the retailer
(piece) SQR 2000.000
The overall operational time
in system (day) TT1 97.00000
Production period of the
supplier (day) TS 0.1000000E -01
Production period of the
manufacturer (day) TM 0.4000000E -01
Manufacturer m2
Distributor d1 Manufacturer m1 Retailer r1
Retailer r2 Supplier s2
Product I
Raw material I
Raw material I
Market
Product I
Product II
Product I
Product II
Supplier s1
Figure 7. The VDS based on two products

46 Guo-Jun Ji
In order to obtain the Pareto-optimal curve for this
optimization problem, one of the objectives is specified as
an inequality with a fixed value for the bound which is
treated as a parameter. There are two major approaches to
solve the problem in terms of this parameter. One is to
simply solve it for a specified number of points to obtain
an approximation of the Pareto optimal curve. The other
is to solve the problem as a parametric programming
problem, which yields the exact solution for the Pareto
optimal curve. While the latter provides a rigorous
solution approach, the former one is simpler to implement.
For this reason we have selected this approach.
Based on given data and abovementioned models, we
can find the retailer maximum undertaken product is the
first bottleneck to the VDS. The maximum inventory of
the retailer is 1000, results in sale is 1000 at this period.
The improved strategy is the retailer’s inventory
supervised by the distributor, such as utilizing VMI
strategy, adding replenishing times, then ensure the
retailer meet the market demand at this period. Thereby,
the transportation costs of distributor and retailer would
increase, where the fixed transportation cost is 500, the
unit transportation costs is 0.7, the optimized results are
represents in Table 1.
Next, we will validate the necessary based on the
numerical results. Firstly, we describe the time change
based on lifecycle curve to forecast two product’s demand
at the same period, their experienced lifecycle curves are
illustrated in Figure 8. Using by the market forecasting,
product II demand change with period can be represented
as follows:
Figure 8. The compare of optimized fore-and-aft
results in system
⎪
⎩
⎪
⎨
⎧
≤≤++−
≤≤
=
9050,5625*50*25.1
500,*2
2
2
2
TTT
TT
FCD
where, T denotes time, 900 ≤≤ T.
Suppose the introducing market time difference of
product I and product II are caused many factors, such as
in the VDS existing the different operational period,
system starting early or late, etc., then the demand
function of product I can be represented:
⎪
⎩
⎪
⎨
⎧
≤≤++−
≤≤+−
=
9060,1200
3
200
9
8
6040,800*100*2
2
2
1
TTT
TTT
FCD
where 9040
≤
≤
T.
Assume that all node enterprises in the VDS have not
throughput restriction, then while T=50, the optimized
parameters of product II are represented in Table 2.
When T=50, the optimized parameters of product I are
represented in Table 3.
Table 2. The optimized results of product II
Product II value flow ($) W2 950440.4
Value created by the
supplier ($) WS2 14750.00
Value created by the
manufacturer ($) WM2 361990.4
Value delivered by the
retailer ($) WR2 573700.0
Materials supplied by the
supplier(piece) SQS 1500.000
Product manufactured by
the manufacturer (piece) SQM 3000.000
Product sold by the retailer
(piece) SQR 3000.000
The overall operational time
in system (day) TS 0.8000000 E-
02
Production period of the
supplier (day) TT2 48.50750
Production period of the
manufacturer (day) TM 0.1050250E-
01
Table 3. The optimized results of product I
Product I value flow ($) W1 125920.0
Value created by the
supplier ($) WS1 4820.000
Value created by the
manufacturer ($) WM1 62760.00
Value delivered by the
distributor ($) WD1 29170.00
Value delivered by the
retailer ($) WR1 29170.00
Materials supplied by the
supplier （piece） SQS 400.0000
Product manufactured by
the manufacturer (piece) SQM 800.0000
Product delivered by the
distributor (piece) SQD 800.0000
Product sold by the retailer
(piece) SQR 800.0000
The overall operational
time in system (day) TT1 43.00000
Production period of the
supplier (day) TS 0.1000000E- 01
Production period of the
manufacturer (day) TM 0.4 000000E- 01
Product demand is 800, the market pricing is $220,
Demand
FCD
Product I
Optimized product I
T=90 T=60 T=40
ΔT
2
,
000
T=50
Product lifecycle

Value Delivery Systems under the Instantaneous Competition
47
then the VDS for product I gains the maximum value is
$125920, the minimum operational period is 43 days. To
adjust value and the operational time in VDS for product I,
aim is farthest shorten time delay of product introduced or
is likely to create the maximum value, the following
strategies would be considered.
(a) Increase product I advertisement fare, endeavor to
improve product I demand. If the sale saturation level of
product I is $440,000, the sale attenuation constant is 0.4,
the sale response constant is 8, the advertising budget of
product I is $44,000, sale at current period is $176,000,
then, using by the promotion strategy, product I demand
would be 1300 at T＝50.
(b) Shorten the operational time, reduce the
manufacturing period, quicken product introducing
market speed, decrease time delay of product introduced
market. If manufacturer reduces the regular unit
production time to 0.02days, and that increases the unit
production cost to $35, based on Lingo8.0 technique, the
optimized results of product I are described in Table 4.
Table 4. The optimized results of product I
Product I value flow ($) W1 200870.0
Value created by the
supplier ($) WS1 7770.000
Value created by the
manufacturer ($) WM1 96110.00
Value delivered by the
distributor ($) WD1 48495.00
Value delivered by the
retailer ($) WR1 48495.00
Materials supplied by the
supplier (piece) SQS 650.0000
Product manufactured by
the manufacturer (piece) SQM 1300.000
Product delivered by the
distributor (piece) SQD 1300.000
Product sold by the retailer
（piece） SQR 1300.000
The overall operational time
in system (day) TT1 39.50000
Production period of the
supplier (day) TS 0.1000000E-
01
Production period of the
manufacturer (day) TM 0.2 000000E-
01
That is 650
1=
s
SQ , 1300
111=== rdm SQSQSQ , the
unit production time of the supplier is 0.01, the unit
production time of manufacturer is 0.02. The maximum
objective value of product I is 200870, and that
operational time is 39.5 days. According to these results,
we can find the optimized strategy is true, not only
increase value of the system, but also shorten the
operational time.
In addition, to product I, because the operational time
of the system by optimized moves up 3.5days (4days
approximately), thus the lifecycle curve of product I will
transfer unit 4 to left axis, it is easily to see in Figure 8.
And, since product I is introduced into market early,
taken on a determinate competitive advantage, mostly
reflected in the maximum demand increasing accordingly.
Suppose that 2400, in this way, we have
⎪
⎩
⎪
⎨
⎧
≤≤++−
≤≤−+
=
9054,35555.55.0
5436,2455*25*2.1
2
2
1
TTT
TTT
FCD
where 9036
≤
≤
T.
When T ＝ 50, demand of product I is 1800, if the sale
saturation level of product I is $528,000, the sale
attenuation constant, the sale response constant and the
advertising budget of product I are same as above, sale at
current period is $396,000, then using by the promotion
strategy, product I demand would be 2200 at T ＝ 50.
Based on Lingo8.0 technique, the optimized result of
product I is described in Table 5.
Table 5. The optimized results of product I
Product I value flow ($) W1 351980.0
Value created by the
supplier ($) WS1 13080.00
Value created by the
manufacturer ($) WM1 172340.0
Value delivered by the
distributor ($) WD1 83280.00
Value delivered by the
retailer ($) WR1 83280.00
Materials supplied by the
supplier (piece) SQS 1100.000
Product manufactured by
the manufacturer (piece) SQM 2200.000
Product delivered by the
distributor (piece) SQD 2200.000
Product sold by the
retailer （piece） SQR 2200.000
The overall operational
time in system (day) TT1 62.00000
Production period of the
supplier (day) TS 0.1000000 E- 01
Production period of the
manufacturer (day) TM 0.2000000E- 01
Therefore, it can be seen, the operational time of the
VDS has already gone beyond the product I time scope,
i.e., all node enterprises on product I must further reduce
the operational time of the system, increase resources, so
as to product I just meet advertising and market demand
at T=50 within the feasible time in the system, otherwise,
the advertisement is in vain.
In conclusion, under IC, the earlier introduced product
often has more advantage than after-comer obviously; Via
the improved strategy, shortened the operational period,
would improve product status in competition and increase
value delivered by the system; Optimization of the VDS

48 Guo-Jun Ji
based on IC must implement the strategy of all node
enterprises; Under IC environment, enterprise must take
on everything, analyze its status in competition, hold the
external market environment and adopt the relative
strategy.
7. Conclusions
In today’s market driven by customers, in which product
life cycle becomes shorter and demand forecast is harder,
the instantaneous competition between enterprises is very
necessary. In this paper, the necessary conditions and the
components of the operation of the VDS are analyzed; the
every node in a VDS to make clear that the function of
each of them in the value creation and addition is
discussed. We firstly discuss the operational frame and
classification of the VDS under IC. Secondly, we analyze
the tactics of IC in supply chain system and the marketing
system, both of which compose the whole VDS. Thirdly,
we analyze some factors that must be controlled in a VDS.
Finally, we set up a multi-objective optimization model,
which is a mixed-integer nonlinear programming problem.
A case study illustrates our conclusions.
8. Acknowledgement
This work is supported by new century outstanding talent
plan in Fujian.
REFERENCES
[1] A.Lockamy Ш. “A conceptual framework for value-
delivery system lead time management”,
INT.J.PROD. RES, 1993, 31( 1), pp.223-233.
[2] Chen, C. L., Wang, B. W., & Lee, W. C. “Multi-
objective optimization for a multi-enterprise supply
chain network”, Industrial Engineering in Chemical
Research, 2003, 42, pp.1879-1889.
[3] Cheng-Liang Chen, Wen-Cheng Lee. “Multi-
objective optimization of multi-echelon supply chain
networks with uncertain product demands and
prices”, Computers and Chemical Engineering,
2004, 28, pp. 1131-1144.
[4] Das, C. “Effect of lead time on inventory: a static
analysis”, Operational Research Quarterly, 1975,
26(2), pp. 273-282.
[5] Duff and Ortega. “How Wal-Mart outdid a once-
touted K-Mart in discount-store race”, Wall Street
Journal, March 24, 1995.
[6] Gibson. “At McDonald’s new receipts for buns,
eggs”, Wall Street Journal, June 13, 1995.
[7] James Harrington, Business Process Improvement,
1991, McGraw-Hill.
[8] James P.Womack and Daniel T.Jones. Lean thinking,
Simon and Shuster, 1996.
[9] John L, Gattorna. Strategic Supply Chain
Alignment, MPG Books Ltd, Bodmin, Cornwall,
1998. Meredith and Shafer, Operations Management
for MBA’s, 1999, Wiley.
[10] Qiufang Fu, Shihua Ma and Yong lin.
“Customization supply chain model based on IC”,
Enterprise Economy (in Chinese), 2005, 2, pp. 37-38.
[11] Shihua Ma and Ling Sheng. (2005) “Predict-order
plan mode with time-based competition in supply
chain”,Computer Integrated Manufacturing Systems
(in Chinese), 2005, 11(7), pp.1001-1006.
[12] Stalk, G. Jr and Hout, T.M., Competing against
Time: How Time-based Competition Is Reshaping
Global Markets,.Free Press, New York, NY, 1990.
[13] Stalk, G. Jr. “Time-the next source of competitive
advantage”, Harvard Business Review, July-August
1988, pp. 41-51.
[14] Swartz, The Hunters and the Hunted, Productivity
Press, 1994. Szwarc, W. “Some remarks on the time
transportation problem”, Naval Research Logistics
Quarterly, 1971, 18, pp. 473-85.
[15] Terry Hill, Manufacturing strategy: Text and cases,
3rd edition, Irwin, 2000.
[16] Vinson, C.E. “The cost of ignoring lead-time
unreliability in inventory theory”, Decision Sciences,
1972, 3,pp.87-105.
[17] Xiao Zhou, Shihua Ma and Chunli Huang.
“Logistics Mode for Shortening of the Multi-stage
Response Time of Supply Chain”, Nankai Busniess
Review (in Chinese), 2002, 5, pp.62-65.
[18] Yanhui Li and Shihua Ma. “Multi-objective
decision model for time based competition
distribution system”, Computer Integrated
Manufacturing Systems (in Chinese), 2005, 11(15),
pp.1516-1519.
[19] Yuxing Han and Xiaowei Liu. “A Study on Safe
Stock Management Based on Time”, Commercial
Research (in Chinese), 2004,12, pp. 71-72.
[20] Yeh,R.T., and Pearlson, K.Zero time: A conceptual
architecture for 21st century enterprises. Sep.19th,
1998.Output:1-35.URL:
http://www.kppartn erscom/down loa ds / zerotime-
white_paper.Pdf, Sep.8th, 2003.
[21] Pearlson, K., and Yeh, R.T. Dell computer
corporation: A zero-time
organization.1999.Output:1-23. http: //www.
Kppartners. com/downloads/ zerotime- dell case
study.pdf,Sep.8th,2003.
[22] Tanik, U., Tanik M. M., and Jololian, L. Internet
enterprise engineering: A “zero-time” framework
based on “T-Strategy” [C], Southeast Con 2001
Proceedings, IEEE, March 30rd–April 1st 2001:
263–270.

Value Delivery Systems under the Instantaneous Competition
49
AUTHOR’S BI OG R A PHY
Guojun Ji is the Professor of Supply Chain Management at the Management School, Xiamen University, China. He
received a BSc in Mathematics in 1982 from Anhui Normal University, China; an MSc in System Engineering in 1993;
and a Ph. D in 1998 both from Southeast University, China. In 1999 he finished his postdoctoral work in Information
Systems from the University of Washington, Seattle, USA. His main area of research is the system engineering and
complexity systematic theory and information technology for logistics, transport and supply chain management. He has
published more than 170 articles on these topics in journals such as: IMA Math. Control and Information, Journal of
International Logistics and Trade, Mathematicae Applicae, IEEE Automatic Control, International Journal of Operation
Research, International Journal of Service Operations and Management etc. Email:

Value Delivery Systems under the Instantaneous Competition
49