Coordination and Enhancement Schemes for Quick Response Mass Customization Supply Chains With Consumer Returns and Salvage Value Considerations

Abstract

Mass customization (MC) programs are commonly seen in the real world. Many companies offer consumer returns and quick delivery for their MC products to the market. Thus, the quick response (QR) strategy is crucial for MC supply chains. Prior studies in related areas only examine MC supply chains with limited features and topics, such as measures for win-win coordination or profit risk analysis, but without a comprehensive consideration of these aspects together. Besides, the systems enhancement schemes are not yet explored. This paper aims to fill these gaps and generate novel insights. Among the findings, we show that a higher salvage value of the consumer returned items and a higher salvage value of the unused inventories both can reduce the value of QR for the supplier. We illustrate how a simple two-part tariff contract and a sophisticated hybrid contract can achieve win-win coordination with different levels of flexibility. We also conduct a profit risk analysis on the MC supply chain. Finally, we demonstrate how three practical measures, namely technology investment, product design improvement, standardization of component, can further improve the MC supply chain system's performance.