A firm that currently produces all items to stock is implementing the concept of postponement in all new product designs. Which of the following outcomes is most likely to result?
Postponement is a strategy whereby the final configuration of a product is delayed as much as possible, usually until a customer order is received. Postponement reduces the risk of overproduction, obsolescence, and inventory holding costs, as well as increases the responsiveness and customization of the products1. A firm that currently produces all items to stock is implementing the concept of postponement in all new product designs. This means that the firm will produce generic or family products that can be differentiated into specific end-products later. This will result in a decrease in the number of finished items stocked, as the firm will only stock the generic or family products and not the final products. The firm will also be able to offer more product variety and flexibility to the customers, as it can customize the products according to the customer orders. Therefore, the most likely outcome of implementing postponement in all new product designs is a decrease in the number of finished items stocked. References: 1 Postponement - Wikipedia 2
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