An empirical study of service postponement: locating the push-pull boundary

The purpose of this paper is to determine if service firms can profitably perform postponement. We develop a general model to identify the optimal location of the push-pull boundary, or extent of postponement. While previous literature discusses the benefit of applying postponement to the service industry this is the first paper to-date that mathematically models the benefit of service postponement. This paper illustrates how service companies can balance the trade-off between increased responsiveness and increased costs. The single-stage newsvendor model is iteratively applied to each stage of the service process to determine the optimal level of postponement. Two examples demonstrate the value of postponement and the impact of changes in service characteristics are investigated. Finally, this paper provides guidance for service industry professionals on policy-level decisions and applications of postponement.