The purpose of this paper is to study the profit optimization of manufacturers who provide personalized products to customers, thus avoiding additional operational costs and response times in the production process of personalized product design.
First, the authors present an integrated model for optimizing profit where the design and production of personalized products are both considered. The authors propose the concept of personalization level and four cases of personalization level are considered including top, high, medium and low levels. Polynomial-time optimal rules are provided for each level by analyzing 17 subcases where all possible personalized products are considered. Then, the authors compare the obtained profit of personalized products with the optimal profit of standardized products.
At low and high levels of personalization, personalized manufacturing is more profitable for specific products with specific characteristics. At the top and middle level of individuation, assuming that the product has certain characteristics, whether the best choice to produce personalized products depends on the level of individuation chosen by customers.
An important decision issue for manufacturers is whether to produce personalized or standardized products. In this study, the authors consider this decision problem and analyze the operational functions of personalized products. The authors hope to provide theoretical support in the operational management of manufacturers offering personalized products.
