3D Printing and Product Assortment Strategy

49 Pages Posted: 12 Oct 2016 Last revised: 15 Feb 2020

See all articles by Lingxiu Dong

Lingxiu Dong

Washington University in St. Louis - John M. Olin Business School

Duo Shi

School of Management and Economics, The Chinese University of Hong Kong, Shenzhen

Fuqiang Zhang

Washington University in St. Louis - John M. Olin Business School

Date Written: February 14, 2020

Abstract

3D printing, as a production technology, distinguishes from conventional technologies in three characteristics: design freedom, i.e., it can handle certain product designs that conventional technologies cannot; quality differentiation, i.e., for the same product design, it might achieve a different quality, higher or lower than that of conventional technologies; and natural flexibility, i.e., it is endowed with capacity flexibility without sacrificing operational efficiency. This paper investigates the joint impact of these characteristics when a firm selects conceptual designs to form its product assortment, taking into account each design's production technology choice from 3D printing and two conventional technologies: dedicated and traditional flexible. Some designs can be handled by any technology (generic), whereas the others are specific to 3D printing (3D-specific). The firm selects designs to be handled by each technology and then invests accordingly in technology adoption, product development, capacity, and production. We characterize the structure of the optimal assortment based on the popularity of each design. Within the sets of generic designs and 3D-specific designs, respectively, the most popular designs should be selected into the assortment; under a mild condition, the optimal assortment comprises the most popular ones among all the designs. Within the optimal assortment, 3D printing should handle the less popular generic designs than conventional technologies. We further demonstrate that a greater design freedom or higher quality of 3D printing may reduce product variety. In the absence of design freedom and quality differentiation, natural flexibility by itself always enhances product variety; by contrast, the traditional flexible technology may reduce product variety. Numerical study shows that 3D printing tends to be more valuable when popularities of the generic designs have a lower Gini index and when popularities of the 3D-specific designs have a higher Gini index.

Keywords: 3D printing; assortment; product design; flexible technology; multinomial logit model

Suggested Citation

Dong, Lingxiu and Shi, Duo and Zhang, Fuqiang, 3D Printing and Product Assortment Strategy (February 14, 2020). Available at SSRN: https://ssrn.com/abstract=2847731 or http://dx.doi.org/10.2139/ssrn.2847731

Lingxiu Dong

Washington University in St. Louis - John M. Olin Business School ( email )

One Brookings Drive
Campus Box 1156
St. Louis, MO 63130-4899
United States

Duo Shi (Contact Author)

School of Management and Economics, The Chinese University of Hong Kong, Shenzhen ( email )

2001 Longxiang Avenue
Shenzhen, Guangdong 518172
China

Fuqiang Zhang

Washington University in St. Louis - John M. Olin Business School ( email )

One Brookings Drive
Campus Box 1133
St. Louis, MO 63130-4899
United States

HOME PAGE: http://www.olin.wustl.edu/faculty/zhang/

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
358
Abstract Views
1,592
rank
92,246
PlumX Metrics