Re-examining Postponement Benefits: An Integrated Production-inventory and Marketing Perspective

Abstract

This chapter presents a new perspective to obtain a better understanding of postponement benefits. This new perspective tries to address the important alignment between the production-inventory and marketing functions, under which we are able to obtain a more complete view on how postponement may enhance firms’ profitability. We developed stylised models to capture the interactions between several factors including inventory, lead time, price and product variety. Through numerical examples we show how postponement facilitates the attainment of a higher profit as the result of improved capability in compromising product variety and delivery lead time, on top of cost savings associated with reduced inventories.