The effect of commonality on safety stock in a simple inventory model
Management Science
Component commonality with service level requirements
Management Science
Optimal investment in product-flexible manufacturing capacity
Management Science
Information and organization for horizontal multimarket coordination
Management Science - Special issue: Frontier research on information systems and economics
Investment Strategies for Flexible Resources
Management Science
Price Versus Production Postponement: Capacity and Competition
Management Science
Optimal Commonality in Component Design
Operations Research
Newsvendor Networks: Inventory Management and Capacity Investment with Discretionary Activities
Manufacturing & Service Operations Management
The Impact of the Secondary Market on the Supply Chain
Management Science
Order-Based Cost Optimization in Assemble-to-Order Systems
Operations Research
Resource Flexibility with Responsive Pricing
Operations Research
Optimal Control of a High-Volume Assemble-to-Order System
Mathematics of Operations Research
Strategic Technology Choice and Capacity Investment Under Demand Uncertainty
Management Science
Product Line Selection and Pricing with Modularity in Design
Manufacturing & Service Operations Management
Queueing Systems: Theory and Applications
The Strategic Perils of Delayed Differentiation
Management Science
Strategic Spot Trading in Supply Chains
Management Science
Manufacturing & Service Operations Management
Inventory, Speculation, and Sourcing Strategies in the Presence of Online Exchanges
Manufacturing & Service Operations Management
Integrating Long-Term and Short-Term Contracting in Beef Supply Chains
Management Science
The Relational Advantages of Intermediation
Management Science
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We consider a manufacturer of mass-customized modular products who orders components under demand uncertainty, and sets prices, produces to order, and trades excess components in a secondary market after this uncertainty is resolved. The sequence of events reflects, in a parsimonious fashion, the considerable reduction in demand uncertainty between the procurement stage and the selling season, typical of industries with long supply lead times and short product life cycles. We prove that, in contrast to conventional wisdom, the value of production flexibility and expected profit increase with demand correlation if, and only if, commonality between the corresponding products does not exceed a threshold. We also prove that the value of flexibility and expected profit may each increase or decrease with demand variability, depending on demand correlations and component commonalities across the entire product line. Finally, we prove that when demand shocks are independent, the optimal product prices are positively correlated if, and only if, the degree of commonality between the corresponding products exceeds a threshold.