...Build-to-Order (BTO), or Mass Customization, means redesigning your production operation to allow for custom orders to be manufactured quickly; this is a means of eliminating demand uncertainty entirely. National Bicycle in Japan used to produce finished bicycles to inventory (Build-to-Stock):
National Bicycle then switched to a BTO model; they created a totally new production system to manufacture and sell custom bicycles, made to individual measure like a made-to-order suit. While the customer did...
Excerpt 2: Demand Management
...Various companies are beginning to provide software tools that aid in demand management. These tools take into account both available inventory and also the cross-elasticities of different products in suggesting pricing strategies for multiple products. How does this work? The portion dealing with available inventory is similar to the yield management algorithms mentioned above, while the portion dealing with cross-elasticities takes into account the differing price-elasticities of demand for various products. There may be some products where the consumer demand is highly price-elastic, meaning demand is highly responsive to a given change in price; and there may be products which are less price-elastic. For example, we would say toothpaste has low price elasticity; if the price of toothpaste increased somewhat, we would still expect consumers to purchase the product at the same rate as before. For the products below, which do you think are more price-elastic and which less so?
Product
Price Elasticity
Answer
Low
High
If products have different price-elasticities, algorithms can make use of this to suggest particular pricing strategies to maximize a firm's objective. Perhaps the firm wants to maximize profit, revenue, or market share. Different objectives would produce different strategies, but the general idea is that using sophisticated strategies can add significantly to a firm's performance...
Excerpt 3: Supply Uncertainty
...By examining what comes into your factories, you may learn something about your suppliers and their processes as well. Consider the figure below. Let's say you expect the product to arrive with a normal distribution of specification tolerances around some mean value (see the red distribution line in the figure below). If instead you are receiving a bimodal distribution (shown with the green lines), something is happening to the units that most closely match the desired specification. For example, the supplier's manufacturing process may be out of control, or your supplier might be selling the lot(s) closest to the expected mean to one of your competitors! Understanding the cause of an unexpected supply distribution may lead to process improvements (or possibly new agreements with suppliers!).
