Optimal commonality and postponement strategies for effective supply chain management

In this thesis we address the optimal use of component commonality and delayed differentiation strategies to mitigate the adverse effects of product proliferation. Our research provides tools to weigh the benefits of increased product variety against the resulting costs in the supply chain. Using our models, firms can measure the effect on operations of end-product variety, and hence choose the optimal level of product variety, component commonality and delayed differentiation for their product families.; Market pressures and increased customer demand for customized products significantly increase the complexity of procurement, production and distribution operations. Concurrently addressing the component design and delayed differentiation problems. We develop a model for a Component Commonality and Postponement Problem that can be used to determine the optimal design of components and the optimal point of differentiation for each component. We develop algorithms for solving the problem and show that simultaneous consideration of component design and postponement policy can lead to significant cost savings over a model that only considers component design.; We then study the case of the Component Commonality and Postponement Problem in which component functionality can be rank ordered. We address the problem of determining the optimal set of component variants to produce to stock, and the assignment of end-product demands to the stocked variants. We characterize the properties of the optimal solution, and develop an efficient solution algorithm. We provide a methodology to evaluate strategies for component commonality and delayed differentiation, as well as to efficiently allocate limited resources among different process improvement projects such as enhanced information systems and projects to reduce the cost of delayed differentiation.; We then extend our work to a two-echelon distribution system. We study a centralized distribution system that produces/procures and distributes components that are used in the assembly of end products. We address the problem of determining the optimal configuration of components to carry in inventory at each location, and the optimal delayed differentiation strategy throughout the supply chain.