"Spackling: Smoothing Make-to-order Production of Custom Products with Make-to-stock Production of Standard Items"

Fri, 15 Nov 2002 00:00:00 +0000

Motivated by issues at a manufacturer of customized- and standard messenger bags, we develop an iterative two-stage framework (involving marketing and operations models) to determine the conditions under which a firm benefits from production spackling. With spackling, the firm uses flexible capacity to produce custom products as demanded each period,

and then fills in, or spackles, the production schedule with make-to-stock output of standard products to restock inventory. Spackling broadly addresses market preferences, while mitigating the effects of "bumpy" demand for custom products by smoothing production, thereby improving capacity utilization as compared to a focused approach, where standard items are made with efficient capacity and custom products with flexible capacity.

The marketing model employs logit-based choice and, given product costs and customer preferences, identifies optimal pricing, expected demand, and demand variability. Interestingly, we find...

Recent anderson_marketing_rw items

"Spackling: Smoothing Make-to-order Production of Custom Products with Make-to-stock Production of Standard Items"