Spackling: Smoothing Make-to-Order Production of Mass-Customized Products with Make-to-Stock Production of Standard Items
نویسندگان
چکیده
Consider a mass customizer who produces multiple variants of a product in make-to-order fashion, and who also produces some standard variants as make-to-stock. We evaluate pricing and production issues from a joint marketing and operations perspective. Marketing determines prices while operations chooses between three production strategies as it sets capacity. A key result is that under the logit-based assumption for our marketing model, it is optimal for all mass-customized products to be priced at the same absolute dollar markup, implying all add-on options are priced at cost. Operations considers the following production strategies: 1) a focus strategy where the firm produces custom variants in a flexible plant and standard items in an efficient plant; 2) a pure-spackling strategy where it produces everything in a flexible plant, first manufacturing custom products as demanded each period, and then filling in, or spackling, the production schedule with make-to-stock output of standard products to restock inventory; or 3) a layered-spackling strategy where it uses an efficient plant to make some of its standard items and a flexible plant where it spackles. A second key result is to identify the optimal production strategy as determined by the tradeoff between the cost premium for flexible (as opposed to efficient) production capacity and the opportunity costs of idle capacity. We illustrate our framework with data from a messenger bag manufacturer. Spackling amortizes fixed costs more effectively and thus has the potential to increase profits from mass customization.
منابع مشابه
Spackling: Smoothing Make-to-Order Production of Custom Products with Make-to-Stock Production of Standard Items
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