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research article

Satisfying Customer Preferences via Mass Customization and Mass Production

Jiang, K.
•
Lee, H. L.
•
Seifert, Ralf W.  
2006
IIE Transactions

Two operational formats namely mass customization and mass production can be implemented to satisfy customer preference-based demand. The mass customization system consists of two stages: the initial build-to-stock phase and the final customize-to-order phase. The mass production system has a single stage: building products with pre-determined specifications to stock. In each case, the company makes decisions on the number of initial product variants, product specifications, production quantities and product pricing. Under a uniform customer preference distribution, the optimal number of base-product variants resembles the well known economic order quantity solution, and the optimal product specifications are equally spaced. We characterize three possible benefits of mass customization: (i) the gained surplus from offering each customer her ideal product; (ii) extra revenue from price discrimination; and (iii) reduced costs due to risk pooling under stochastic demand.

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Type
research article
DOI
10.1080/07408170500346386
Author(s)
Jiang, K.
•
Lee, H. L.
•
Seifert, Ralf W.  
Date Issued

2006

Published in
IIE Transactions
Volume

38

Issue

1

Start page

25

End page

38

Peer reviewed

REVIEWED

Written at

EPFL

EPFL units
TOM  
Available on Infoscience
September 7, 2004
Use this identifier to reference this record
https://infoscience.epfl.ch/handle/20.500.14299/170098
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