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JACIII Vol.19 No.3 pp. 423-429
doi: 10.20965/jaciii.2015.p0423
(2015)

Paper:

A Simulation Research on Inventory Cost of Custom Product Under E-commerce Circumstances

Shuangjiao Fan*,** and Xuping Wang*,***,†

*Institute of Systems Engineering, Dalian University of Technology
No. 2, Linggong Road, Dalian 116023, China
**School of Mechanical Engineering and Automation, Dalian Polytechnic University
No. 1, Qinggongyuan, Dalian 116034, China
***School of Business, Dalian University of Technology
Panjin, China
†Corresponding author

Received:
January 2, 2014
Accepted:
February 28, 2015
Online released:
May 20, 2015
Published:
May 20, 2015
Keywords:
e-commerce, mass customization, custom product, inventory strategy, inventory cost
Abstract

E-commerce makes it possible to promote mass customization in practice. Manufacturers provide custom product which enables customers to select each components of the product from several variants according to their own preferences. Providing custom product increases the complexity of the inventory management, and the characteristics of inventory cost are different with those of common product. For custom product orders under e-commerce circumstances are significantly random and fluctuant, we research on this issue in the discrete system simulation method. We consider a same kind of product which is manufactured in either way of the common case and the custom case, design inventory cost simulation models for both situations supposing they adopt (s, S) inventory strategy. The results show that although the mass customization makes the inventory system more complicated, it could bring some benefits to inventory management. Compared with the inventory cost of common product, the inventory cost of custom product could be even lower and less sensitive about the product price, the change of purchase volumes and the order quantity. The conclusions could be suggestive for practice and provide confidence to manufacturers when they hesitate to supply custom products.

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Last updated on Mar. 28, 2017