Analysis of form postponement based on optimal positioning of the differentiation point and stocking decisions

Abstract

In this paper we analyse the use of form postponement based on the positioning of the differentiation point and stocking policy. Six classes of manufacturing configurations are identified based on the choice of whether or not form postponement is employed and the decision regarding the stocking policy for the final product configurations as well as for the generic component. Analytical evaluation methods based on queuing models are used to assess operational measures for each class of configuration and solution algorithms are developed to determine the optimal positioning of the differentiation point and the optimal stocking levels. This allows us to compare the relative merits of all manufacturing configurations based on their respective best performances. The results of a numerical experiment show how different operational parameters may influence the choice of optimal configuration, the preference of early or late postponement, and the relative cost savings obtained from employing form postponement.

Keywords:

• supply chain management
• inventory control
• postponement
• stochastic model