Production and Pricing Policy of ATO Manufacturer with Heterogeneous Customer Segment and Demand

Under the assumption that customers divided into different independent segments have heterogeneous preference on products of a product family and sensitivities to their prices, this paper proposes an ATO (Assemble-to-Order) manufacturer production and pricing model to study how the ATO manufacturer meets the heterogeneous demands of consumers from different segments by product selection and pricing. It is found that a product family ATO manufacturer would better always keep more than one type of product are available in the market to better meet customers' heterogeneous demands and provide only one flagship product to every customer segment.