Developing price and production postponement strategies of substitutable product

Yohanes Kristianto Nugroho (University of Vaasa, Vaasa, Finland)

Journal of Modelling in Management

ISSN: 1746-5664

Publication date: 28 June 2013

Abstract

Purpose

This paper aims to focus on duopolistic competition under dynamic price and production postponement for two differentiable products that share common product platform at a certain degree of product commonality.

Design/methodology/approach

Both price and production postponement modelling are benchmarked according to their profit in order to investigate the product substitutability effect to the profit and also their appropriateness to different competition situations. In addition, dynamic property is applied to show the demand changes effect of both strategic decisions (price and production) against demand uncertainty.

Findings

The results show that the pure price postponement is appropriate to be applied into highly customized products while pure production postponement to configurable products.

Research limitations/implications

Price and production postponement decisions help managers to optimize product development as well as production strategy by considering demand and supply sides.

Practical implications

Price and production postponements give alternative ways to managers for deciding on how to produce products as fighting product and mass customized product.

Originality/value

Innovative price and production postponement models are the novelty of this paper.

Keywords

Citation

Kristianto Nugroho, Y. (2013), "Developing price and production postponement strategies of substitutable product", Journal of Modelling in Management, Vol. 8 No. 2, pp. 190-211. https://doi.org/10.1108/JM2-07-2010-0030

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Publisher

:

Emerald Group Publishing Limited

Copyright © 2013, Emerald Group Publishing Limited

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