Managing build‐to‐order short life‐cycle products: benefits of pre‐season price incentives with standardization

Abstract In this paper we consider a firm that can produce standardized products (SP) or customized build‐to‐order products (BOP) with short life‐cycles. We develop a stochastic dynamic programming model to study the effect of offering price incentives to those customers who are willing to commit themselves to purchasing the cheaper‐to‐produce standardized product. The market’s reaction to price incentives is captured by modeling the …