Mean-variance analysis for mass customization fashion supply chains

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Mean-variance analysis for mass customization fashion supply chains

 

Author: Liu, Na
Title: Mean-variance analysis for mass customization fashion supply chains
Degree: Ph.D.
Year: 2012
Subject: Hong Kong Polytechnic University -- Dissertations
Fashion merchandising.
Flexible manufacturing systems -- Mathematical models.
Product management -- Mathematical models.
Mass customization -- Mathematical models.
Department: Institute of Textiles and Clothing
Pages: vi, 158 p. : ill. (some col.) ; 30 cm.
Language: English
InnoPac Record: http://library.polyu.edu.hk/record=b2530072
URI: http://theses.lib.polyu.edu.hk/handle/200/6693
Abstract: Mass customization (MC), which combines the benefits of mass production and customization, is popular in the fashion industry. Big name brands such as Nike have adopted this strategy to attract more customers' involvements to enhance the customers' loyalty and increase the sales. It is also a hot research topic over the past decade. This thesis research explores MC with an analytical approach supplemented with real empirical cases. It focuses on investigating the problem via the mean-variance (MV) framework. First, motivated by industrial observations and based on the reviewed literature, a theoretical model in a monopoly setting is constructed to explore the optimal decisions on retail pricing, modularity level, and consumer returns under an MV framework. Second, a game-theoretical analysis is conducted to examine the problem in a duopoly setting. Owing to the complexity of the problem, the analysis is divided into two cases. In the first case, the game in which the companies compete on modularity level and return price with a market-given retail price is examined. In the second case, the game in which the companies compete on retail price, modularity level and return price is investigated. The impacts brought by each important parameter on the optimal decisions as well as the respective MV objective value are explored by sensitivity analysis. Numerical analyses are also included. By comparing the analytical and numerical results of the different models, this thesis research finds that: (i) some parameters, such as the refund-return sensitivity coefficient and the modularity-cost coefficient, have different or even opposite effects on the optimal decisions and MV objective values comparing between the monopoly and duopoly cases, (ii) in the duopoly market, degrees of risk aversion of the competing companies significantly affect the equilibriums of the game, (iii) significant differences between the duopoly games with the exogenous retail price and the endogenous retail price cases are observed, and different impacts brought by some important model parameters are noticed, such as the reuse value of the returned product and the cross-effect coefficient on modularity. This thesis contributes to the literature by providing academic and managerial insights on MC, which is widely implemented by companies in the fashion industry. The research findings derived from the proposed models could fill the existing research gap in the literature within MC. It is believed that this research not only makes a significant contribution to the literature on supply chain management, but also provides practical suggestions to industrialists in fashion industry to help them better shape their MC strategy.

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