An application of postponement strategy in supply chain

Abstract

In this paper, a hybrid postponement strategy for time sensitive customers is proposed. The hybrid postponement which is discussed differs from a total postponement strategy in that it allows the stock of both finished goods and common products. In this research, we examine under what condition the hybrid postponement strategy is optimal. Finally, using analysis, we find that the hybrid postponement strategy is optimal under certain parameter setting. We compare the total postponement cost of the optimal hybrid postponement strategy with that of the best total postponement strategy and find the savings would be significant in some cases. © 2011 IEEE.