Accurate response by postponement

Accurate response and postponement are two strategies for a firm to deal with demand uncertainty and better match supply with demand. Under accurate response, reactive capacity could be used for customized make-to-order (MTO) production according to customer demands. On the other hand, using postponement a firm could perform the non-postponed activities speculatively and use reactive capacity only to customize the final product thereby enhancing the profitability of accurate response. Surprisingly existing research in the areas of accurate response and postponement does not address this potential. In this paper we aim to fill this gap by proposing a stylized model for accurate response by postponement.