A Game Theoretic Approach to assessing Additive Manufacturing as a Strategic Choice

Abstract

This paper studies the impact of demand uncertainty and competition on a firms technology selection decision between Additive Manufacturing (AM) and conventional tool-based Dedicated Manufacturing (DM). The paper uses the game-theoretic approach presented in [57], and extends the model from 2 to n players making three sequential decisions under demand uncertainty: (i) choice of technology, (ii) capacity investment, and (iii) production quantities. We find that the conventional wisdom of choosing between flexible manufacturing technology and dedicated tool-based technology holds in the case of AM given there is no demand uncertainty. However, once we take the demand uncertainty into account, a game-theoretical analysis is essential to examine the profitability of switching manufacturing technologies to AM. The research will contribute towards a future empirical study and will help develop an industrially accessible decision support tool for the adoption of AM in a production environment.