IDEAS home Printed from https://ideas.repec.org/a/eee/proeco/v166y2015icp72-84.html
   My bibliography  Save this article

Late customization strategy with service levels requirements

Author

Listed:
  • Ngniatedema, Thomas
  • Shanker, Murali
  • Hu, Michael Y.
  • Guiffrida, Alfred L.
  • Eddy Patuwo, B.

Abstract

Both supply issues and interaction between various stages of a production network are common occurrences in product customization under a delayed differentiation strategy. This paper studies non-decouple systems for product customization in the context of a single-market segment under a delayed differentiation strategy by incorporating supply issues and interaction between various stages of a production network. We analyze two alternatives for customizing two individual products. One alternative is the contractual obligations for raw materials delivery where the supplier is responsible for maintaining certain inventory service levels agreements. The other alternative is the customer demand requirements where the manufacturer is responsible for maintaining certain end-products service levels to prevent customer erosion. We characterize the service level requirements in both scenarios and determine the optimal customization point of the production network where the practitioner can operate at minimum cost. We use a Bayesian Belief Networks method to model interaction between stages of the production network and derive the inventory service level requirements. A mini-case involving the customization of a personal desktop computer is used to illustrate the applicability of this framework. We also compare the benefits of delayed product differentiation under non-decouple systems and the traditional decouple systems and provide insights into how firms can choose the right strategy to effectively compete.

Suggested Citation

  • Ngniatedema, Thomas & Shanker, Murali & Hu, Michael Y. & Guiffrida, Alfred L. & Eddy Patuwo, B., 2015. "Late customization strategy with service levels requirements," International Journal of Production Economics, Elsevier, vol. 166(C), pages 72-84.
    • Handle: RePEc:eee:proeco:v:166:y:2015:i:c:p:72-84
    DOI: 10.1016/j.ijpe.2015.04.001
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0925527315001164
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.ijpe.2015.04.001?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Ma, Shihua & Wang, Wei & Liu, Liming, 2002. "Commonality and postponement in multistage assembly systems," European Journal of Operational Research, Elsevier, vol. 142(3), pages 523-538, November.
    2. Yossi Aviv & Awi Federgruen, 2001. "Design for Postponement: A Comprehensive Characterization of Its Benefits Under Unknown Demand Distributions," Operations Research, INFORMS, vol. 49(4), pages 578-598, August.
    3. Ernst, Ricardo & Kamrad, Bardia, 2000. "Evaluation of supply chain structures through modularization and postponement," European Journal of Operational Research, Elsevier, vol. 124(3), pages 495-510, August.
    4. Hau L. Lee, 1996. "Effective Inventory and Service Management Through Product and Process Redesign," Operations Research, INFORMS, vol. 44(1), pages 151-159, February.
    5. Ngniatedema, Thomas & Fono, Louis Aimé & Mbondo, Georges Dieudonné, 2015. "A delayed product customization cost model with supplier delivery performance," European Journal of Operational Research, Elsevier, vol. 243(1), pages 109-119.
    6. Hau L. Lee & Corey Billington, 1993. "Material Management in Decentralized Supply Chains," Operations Research, INFORMS, vol. 41(5), pages 835-847, October.
    7. Hsu, Hsi-Mei & Wang, Wen-Pai, 2004. "Dynamic programming for delayed product differentiation," European Journal of Operational Research, Elsevier, vol. 156(1), pages 183-193, July.
    8. Hau L. Lee & Corey Billington & Brent Carter, 1993. "Hewlett-Packard Gains Control of Inventory and Service through Design for Localization," Interfaces, INFORMS, vol. 23(4), pages 1-11, August.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Çömez-Dolgan, Nagihan & Tanyeri, Başak, 2015. "Inventory performance with pooling: Evidence from mergers and acquisitions," International Journal of Production Economics, Elsevier, vol. 168(C), pages 331-339.
    2. Chiara Freichel & Nicolas Neis & Axel Winkelmann, 2021. "A Taxonomy For Interorganizational Production Networks," Business Logistics in Modern Management, Josip Juraj Strossmayer University of Osijek, Faculty of Economics, Croatia, vol. 21, pages 167-187.
    3. Ding, Huiping & Chen, Xiangbo & Lin, Kuanhai & Wei, Yunbing, 2019. "Collaborative mechanism of project profit allotment in petroleum engineering service chain with customized integration," International Journal of Production Economics, Elsevier, vol. 214(C), pages 163-174.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ngniatedema, Thomas & Fono, Louis Aimé & Mbondo, Georges Dieudonné, 2015. "A delayed product customization cost model with supplier delivery performance," European Journal of Operational Research, Elsevier, vol. 243(1), pages 109-119.
    2. Weskamp, Christoph & Koberstein, Achim & Schwartz, Frank & Suhl, Leena & Voß, Stefan, 2019. "A two-stage stochastic programming approach for identifying optimal postponement strategies in supply chains with uncertain demand," Omega, Elsevier, vol. 83(C), pages 123-138.
    3. Gunasekaran, Angappa & Ngai, Eric W.T., 2009. "Modeling and analysis of build-to-order supply chains," European Journal of Operational Research, Elsevier, vol. 195(2), pages 319-334, June.
    4. Li, Jian & Edwin Cheng, T.C. & Wang, Shouyang, 2007. "Analysis of postponement strategy for perishable items by EOQ-based models," International Journal of Production Economics, Elsevier, vol. 107(1), pages 31-38, May.
    5. Daniel Granot & Shuya Yin, 2008. "Price and Order Postponement in a Decentralized Newsvendor Model with Multiplicative and Price-Dependent Demand," Operations Research, INFORMS, vol. 56(1), pages 121-139, February.
    6. Graman, Gregory A., 2010. "A partial-postponement decision cost model," European Journal of Operational Research, Elsevier, vol. 201(1), pages 34-44, February.
    7. Tibben-Lembke, Ronald S. & Bassok, Yehuda, 2005. "An inventory model for delayed customization: A hybrid approach," European Journal of Operational Research, Elsevier, vol. 165(3), pages 748-764, September.
    8. Li, Jian & Wang, Shouyang & Cheng, T.C. Edwin, 2008. "Analysis of postponement strategy by EPQ-based models with planned backorders," Omega, Elsevier, vol. 36(5), pages 777-788, October.
    9. Song, Zhe & Kusiak, Andrew, 2010. "Mining Pareto-optimal modules for delayed product differentiation," European Journal of Operational Research, Elsevier, vol. 201(1), pages 123-128, February.
    10. Alptekinoglu, Aydin & Tang, Christopher S., 2005. "A model for analyzing multi-channel distribution systems," European Journal of Operational Research, Elsevier, vol. 163(3), pages 802-824, June.
    11. Katsuyoshi Takashima, 2010. "Defining Product Customization as Form Postponement," Discussion Papers 2010-18, Kobe University, Graduate School of Business Administration.
    12. Yossi Aviv & Awi Federgruen, 2001. "Design for Postponement: A Comprehensive Characterization of Its Benefits Under Unknown Demand Distributions," Operations Research, INFORMS, vol. 49(4), pages 578-598, August.
    13. Alfaro, José A. & Corbett, Charles J., 2000. "The value of SKU rationalization: the pooling effect under suboptimal inventory policies," DEE - Working Papers. Business Economics. WB 9917, Universidad Carlos III de Madrid. Departamento de Economía de la Empresa.
    14. Guillermo Gallego & Özalp Özer & Paul Zipkin, 2007. "Bounds, Heuristics, and Approximations for Distribution Systems," Operations Research, INFORMS, vol. 55(3), pages 503-517, June.
    15. Wong, Hartanto & Potter, Andrew & Naim, Mohamed, 2011. "Evaluation of postponement in the soluble coffee supply chain: A case study," International Journal of Production Economics, Elsevier, vol. 131(1), pages 355-364, May.
    16. Hau L. Lee & Christopher S. Tang, 1998. "Variability Reduction Through Operations Reversal," Management Science, INFORMS, vol. 44(2), pages 162-172, February.
    17. Jewkes, Elizabeth M. & Alfa, Attahiru S., 2009. "A queueing model of delayed product differentiation," European Journal of Operational Research, Elsevier, vol. 199(3), pages 734-743, December.
    18. Avi Herbon & Matan Shnaiderman & Tatyana Chernonog, 2018. "Postponed two-pricing and ordering opportunity for selling a single season inventoried product," Annals of Operations Research, Springer, vol. 271(2), pages 619-640, December.
    19. Beamon, Benita M., 1998. "Supply chain design and analysis:: Models and methods," International Journal of Production Economics, Elsevier, vol. 55(3), pages 281-294, August.
    20. Xiong, Yixuan & Du, Gang & Jiao, Roger J., 2018. "Modular product platforming with supply chain postponement decisions by leader-follower interactive optimization," International Journal of Production Economics, Elsevier, vol. 205(C), pages 272-286.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:proeco:v:166:y:2015:i:c:p:72-84. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/ijpe .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.