Research on enterprise capacity decision behaviors for customized production

This research establishes an analytical model of the capacity allocation process, where the enterprise pursues maximum total customer value subject to the limited customization costs and adjustment costs. It is well-known that the less the discrepancy between customer requirements and enterprise offerings, the higher customer-perceived value is. Therefore, the optimization objective of the analytical model turns out to be minimizing customization gap. Moreover, customization capacity of the manufacturer can be expressed as the combination function of all the quality attributes value. This function represents a curved surface in n-dimensional vector space and the supply attribute vector is the projection point of demand attribute vector on this surface. Then the customization gap can be denoted by the distance between these two vectors. Once the firm dynamically adjusts its capacity allocation on different quality attributes, the function parameters will be modified correspondingly. Meanwhile, the constraint conditions of this model are consisted of the different range of variation about total customization costs and adjustment costs. Furthermore, this paper provides a numerical simulation of 2-dimensional model considering product quality and service quality, which can illustrate how the enterprise makes capacity decision by virtue of the analytical model. And the results show that if the upper bound of total adjustment cost remains constant, the enterprise will consistently to strengthen the customization capacity on the service attributes as long as the unit cost of adjusting service quality is lower than that of product quality.