Evaluating the Economic Effect of the Delayed Differentiation in the Customized Product’s Supply Chain Network

Abstract

Employing delayed differentiation in the customization product supply chain network (CPSCN) can bring customers more opportunities for personalized products, but bears the cost pressure. As to assemble CPSCN, on the basis of building the cost model, considering the changes of the fixed investment and product cost at transferring standard production to customization production, this paper proves firstly, the fixed investment has economy threshold and diseconomy threshold. When the real fixed investment is less than economy threshold (or greater than diseconomy threshold), the production cost of the supplier decreases (or increases) with the increase of postponement degree. When the real fixed investment is between the two thresholds, postponement degree has a threshold; if the actual postponement degree is less or more than this threshold, the production cost decreases or increases with the increase of postponement degree. Secondly, by deducing relationship between the total costs of CPSCN and the fixed investment, and the postponement degree, it is proved that, the economy of the supplier’s delayed differentiation directly decides the economy of CPSCN’s delayed differentiation; the impact of different supplier on the total cost of CPSCN is different. Finally, the conclusions have been verified through the simulation. The economy analysis provides the measurement tools, identification criteria and decision foundation for evaluating CPSCN’s delayed differentiation.