Customizing customization in a 3D printing-enabled hybrid manufacturing supply chain

Abstract

At-scale manufacture of customized products often requires both traditional processes and 3D Printing (3DP)-enabled additive manufacturing. Such hybrid manufacturing supports varying degrees of product customization achieved through variance in the mix of traditional and 3DP processes. Further, it supports the customization of the configuration of the 3DP-enabled supply chain. Our research investigates decision-making by 3DP manufacturers to obtain optimal profits based on the degree of customization. A two-echelon manufacturer-retailer supply chain that distributes customized products online and offline based on customers' channel preferences is considered. The Stackelberg Game model was used to study decision-making between the leader (manufacturer) and the follower (retailer). We analyzed two models: the centralized manufacturer-customized model and the decentralized retailer-customized model. The key findings of our study are as follows: Firstly, when the unit production cost is relatively small, it is optimal for the 3DP provider to offer consumers fully 3DP customized products. Secondly, with both the manufacturer-customized and the retailer-customized model, an increase in consumers' offline channel preference, will reduce the overall profits. Thirdly, in the retailer-customized model, the optimal selling price and profits are not affected by the ratio of the manufacturer's unit production cost and the total unit production cost. Finally, when the unit production cost increases with the customization degree, the optimal customization degree is relatively insensitive to potential market size changes. Our findings have practical relevance for firms seeking to gain a competitive advantage by deciding on the degree of customization and supply chain configuration strategies for 3DP manufacturing.