Decision making on production mode selection for manufacturing enterprises under two types of market structure

In the market demand characterized by increasingly diverse product variety and shorter delivery time, it has become an urgent issue for many manufacturing enterprises to decide whether to implement mass production or mass customization. The present paper proposed different profit models under two types of market structure of monopoly and duopoly. To solve these models, backward induction method was employed, which is evaluated as an effiective approach in settling the subgame-perfect Nash equilibrium. Then, feasible plans for production mode selection with regard to different conditions were obtained through systematical analyses of selecting either mass production or mass customization under monopoly, and different combined decisions of mass production and mass customization under duopoly. The research results contribute to providing theory and method support for manufacturing enterprises to make decisions on production mode selection under two types of market structure of monopoly and duopoly.