Options-based Planning for Mass-Customization: A Simulation-Optimization Model

Abstract

Increasingly, customers expect products highly customized with reduced lead-times. Additionally, intense geopolitical, economic and regulatory uncertainties render long lead-times increasingly risky for both equipment suppliers and customers alike. This article presents a mass customization model called optionsbased planning (OBP) which is better adapted to complex market realities than legacy production models. A discrete event simulation examines the performance of the new model compared to legacy production strategies. Under conditions of high market turbulence (i.e. trade wars, pandemics, etc.), the new model allows shorter customer lead-time while maintaining the high level of customization expected of highly valued capital equipment.