Abstract
Additive manufacturing (AM), originally used for prototyping, is increasingly adopted for custom final part production across different industries. This usage brings new manufacturing opportunities for mass customization (MC). However, printing speed and production volume are two barriers to AM adoption for product customization on a large scale. But what if manufacturers could combine the benefits of AM for product customization with traditional MC technologies over the product life cycle (PLC)? We address this opportunity through a mathematical model that considers a monopolist manufacturer producing horizontally differentiated products at scale. To satisfy individual customer preferences, under PLC and capacity considerations, the firm jointly optimizes the following decisions: inventory, production quantity, product variety, optimal technology-switching times (between AM and MC), and pricing policy. Our approach can be implemented by decision-makers to leverage customer-centricity and benefit from this novel hybrid manufacturing practice. We derive a closed-form solution for the production quantity decision based on an adaptive inventory policy. We solve the resulting non-convex optimization problem using the Sample Average Approximation framework grounded by analytical results. Our results demonstrate that the new usage of AM with MC can benefit a manufacturer for customer-centric driven strategies. Significant profit improvements can be achieved with an AM-MC-AM technology-switching scenario, under certain capacity conditions, and with an increasing-decreasing pricing policy. Our results also indicate that the benefits of pricing flexibility are highest when capacity is unlimited, or when the firm does not hold inventory. Under capacity constraints, a simple decreasing pricing policy combined with inventory performs very well.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.