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Product Line Flexibility for Agile and Adaptable Operations

Author

Listed:
  • H. Müge Yayla‐Küllü
  • Jennifer K. Ryan
  • Jayashankar M. Swaminathan
Abstract
Firms increasingly need to manage uncertainty and become more agile and adaptable. This study considers how a multi‐product firm can use its product mix, resource capacity allocation, and pricing decisions to manage challenges such as structural economic shifts or changes in consumers' willingness‐to‐pay. Firms that seek to develop and use such a product line face a fundamental trade‐off. On the one hand, multiple products compete for the demand externally (i.e., cannibalization effects), as well as for the limited resource capacity internally. On the other hand, a multi‐product firm does have the ability to change the product mix and to adjust the production quantity and pricing of each product in order to manipulate supply and demand as conditions change. In this study, we demonstrate that a multi‐product firm can become more agile and adaptable under consumer purchasing behavior uncertainty by employing postponement in product mix, quantity, and pricing decisions, and by allocating capacities appropriately. In particular, we show that a firm can use its product line flexibility to make strategic adjustments after understanding the realized economic conditions, and to decide whether to follow a focus or segmentation strategy. We also extend the model to look at the value of resource flexibility and find that it has little or no benefit above and beyond the product line flexibility studied here.

Suggested Citation

  • H. Müge Yayla‐Küllü & Jennifer K. Ryan & Jayashankar M. Swaminathan, 2021. "Product Line Flexibility for Agile and Adaptable Operations," Production and Operations Management, Production and Operations Management Society, vol. 30(3), pages 725-737, March.
    • Handle: RePEc:bla:popmgt:v:30:y:2021:i:3:p:725-737
    DOI: 10.1111/poms.13313
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    References listed on IDEAS

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    Cited by:

    1. Qiang Liu & Xiaofeng Liu & Subramanian Balachander, 2021. "Crowdfunding Project Design: Optimal Product Menu and Funding Target," Production and Operations Management, Production and Operations Management Society, vol. 30(10), pages 3800-3811, October.
    2. Wenzhu Zhang & Yue Dai & Lin Tian, 2022. "Impact of capacity flexibility on service product line design," Annals of Operations Research, Springer, vol. 312(2), pages 1095-1118, May.
    3. Perraudat, Antoine & Dauzère-Pérès, Stéphane & Vialletelle, Philippe, 2022. "Robust tactical qualification decisions in flexible manufacturing systems," Omega, Elsevier, vol. 106(C).

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