Production and Operations Management 1997
AN ANALYSIS OF PURCHASING COSTS AS THE NUMBER OF PRODUCTS‘ COMPONENTS IS REDUCED
Abstract
Product design efforts in recent years have focused on standardization and simplification of the product structure. It has been widely argued that savings, tangible and intangible, can be realized by simplifying the product design. In this study, we examine this belief and show that other issues like flexibility of process and design are important as well. We demonstrate that having process flexibility, e.g., of producing a product in two different ways, using two different product structures (as opposed to one), is advantageous with respect to components purchasing costs. This result is in contrast with the notion of standardization since the variety of components in the flexible design is increased. Properties of savings in purchasing costs associated with the use of this flexible design are provided.
- DOI
- 10.1111/j.1937-5956.1997.tb00482.x
- Sources
- openalex