A delayed product customization cost model with supplier delivery performance

Thomas Ngniatedema, Louis Aimé Fono and Georges Dieudonné Mbondo

European Journal of Operational Research, 2015, vol. 243, issue 1, 109-119

Abstract: The concept of delayed product differentiation has received considerable attention in the research literature in recent years. However, few analytical models explain and quantify the benefits of delayed product differentiation strategy with additional consideration of supplier delivery performance. This paper proposes a delayed product differentiation model in which a supply of raw materials is integrated at the beginning of the production process to match uncertain demand in a cost-effective way given the constraint of lead time delivery window. It develops insights regarding a delayed product differentiation strategy and shows that with respect to delivery windows, supplier delivery performance plays an important role in the determination of the optimal point of differentiation. This study also shows that when the “on-time” and the “late” portions of the delivery window are constant, the proposed cost function coincides with similar models found in the literature. An extension of this work also reveals that when the customer service level varies across various production stages, its choice affects the decision to delay or postpone the customization point. A mini industrial case involving the customization of a personal desktop computer is used to illustrate the applicability of the resulting framework.

Keywords: Delayed product differentiation; Supplier lead time delivery window; Product customization (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ejores:v:243:y:2015:i:1:p:109-119

DOI: 10.1016/j.ejor.2014.11.017

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