Developing price and production postponement strategies of substitutable product

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.

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.

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

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

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

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