Product line strategy and supply chain structures for mass customized production using 3D printing

Abstract

We develop game-theoretical models to capture unique features: design freedom, natural flexibility, and quality distinction of 3D printing, and propose the customization degree and unique labour division for 3D-printed products. We investigate a manufacturer’s product line strategy with 3D printing. The manufacturer can offer single standardized products (strategy S), single 3D-printed products (strategy T), or both products (strategy L) to consumers through its retailer. We further explore how supply chain structures influence the manufacturer’s product line strategy. We find (i) the optimal customization degree of 3D-printed products is lower under strategy L than strategy T. (ii) When the development cost of 3D-printed products is low/relatively low/moderate/high and the utility from product fit is high/moderate/relatively low/low, the manufacturer adopts strategy L/T/L/S. (iii) The retailer expects the manufacturer to adopt strategy T or L. (iv) In the centralised supply chain, the manufacturer prefers strategy L to T when the development cost of 3D-printed products is low. Moreover, the centralised supply chain is inferior to the manufacturer when the utility from product fit is low under strategy T and when the marginal development cost is intermediate under strategy L. We provide managerial insights for designing mass-customized products and product lines using 3D printing.