Product and Process Design for Supply Chain Management (back to catalog)

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...A tool called conjoint analysis may be used to estimate the potential benefits from offering customization. Conjoint analysis refers to a method of evaluating consumer preferences by asking individuals to make choices between different sets of options. For example, an auto manufacturer could show consumers a series of paired car profiles with different prices and optional equipment, and for each pair, ask them to select which car they would prefer. The product profiles are carefully selected to help researchers identify consumer choices; sophisticated models analyze the choices consumers made, to identify which options are most important and how much consumers would be willing to pay for them. Provided the sample of consumers is representative of your target market, this information can help you determine what kinds of customization to offer, how to price it, and its expected impact on sales and market share.

Conjoint Analysis (pairing example)
Car A Car B


Front & side airbags

Premium stereo

5-liter engine


Front airbags only

AM/FM radio

5-liter engine
<< strongly prefer A strongly prefer B >>









Conjoint analysis would ask a series of questions similar to the above; for each pairing, the customer chooses one of the buttons based on how much they prefer choice A or choice B. As the customer makes choices between various prices and features, patterns of preferences emerge. These patterns can be used to place a value on customization of products (whether to offer choices, how many to offer, and what price to charge for each).

Mass customization may not be suitable for all products and markets, nor is every implementation a "win-win"...


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SCM106 Specifications

Title: Product and Process Design for Supply Chain Management

4.3 / 5  (1240 ratings)

Total Reading Time: Approx. 1 - 2 hours (for average readers)

Word Count: Approx. 10,600 words


Certificate: Counts toward Fundamentals of Supply Chain Management

Datasheet:  Download


  1. Introduction; Component Commonality, Modularity, Modular vs. Integral Design
  2. Universality
  3. Framework for Costs and Benefits
  4. Benefits of Design Changes
  5. Benefits of Design Changes, Continued
  6. Postponement: The HP Deskjet Printer
  7. Postponement Costs and Benefits (Deskjet Printer, continued)
  8. A Quick Estimate of Postponement Benefits from Reduced Inventories
  9. Packaging Postponement
  10. Postponement via Software
  11. End-of-Life and New Product Situations
  12. Process Design for Postponement
  13. Mass Customization
  14. Incentive Issues
  15. Conclusions
  16. Test Your Knowledge
  17. Feedback
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