What is it about?
Here, we have analytically arrived at the solution which gives the manager the optimum level of postponement. We identify the optimum level of postponement in the context of manufacturing, given the trade-off between level of postponement and associated cost. We calculate the expected total profit with different demand scenarios. The parametric analysis in this study shows that if price of the product decreases, then optimal amount of postponement also decreases.
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Why is it important?
It is important for a manager to identify the optimum level of postponement. In practice, managers usually take this decision on the basis of their judgment and trivial analysis of trade-off between costs and benefits of postponement. In this paper, analytical identification of optimal postponement strategy is described.
Perspectives
Although there exists an array of literature explaining the benefits of postponement strategy, there are very few which talks about identification of optimal level of postponement analytically. This paper bridges tha gap in literature.
Shantanu Bagchi
IMT Hyderabad
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This page is a summary of: Optimization of postponement process for a two stage modular manufacturer, Journal of Global Operations and Strategic Sourcing, February 2018, Emerald,
DOI: 10.1108/jgoss-03-2017-0009.
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