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Simultaneous determination of product attributes and prices, and production processes in product‐line design
Author(s) -
Raman Narayan,
Chhajed Dilip
Publication year - 1995
Publication title -
journal of operations management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 3.649
H-Index - 191
eISSN - 1873-1317
pISSN - 0272-6963
DOI - 10.1016/0272-6963(95)00013-i
Subject(s) - computer science , new product development , product (mathematics) , product design , product design specification , production (economics) , process (computing) , product management , risk analysis (engineering) , process management , industrial engineering , operations research , business , marketing , economics , microeconomics , engineering , mathematics , geometry , operating system
Global competition, rapid changes in technology, and market fragmentation have resulted in shorter product life cycles. In order to remain viable, it is increasingly important for firms to introduce new products frequently. Product design is a complex process that involves coordination of activities among several functional disciplines within the company as well as the customers and the suppliers. Traditionally, the information flow among the various product development stages has been sequential. However, there is increasing evidence to suggest that an integrated approach that considers several stages simultaneously may be superior. This paper provides a decision support tool for implementing such an integrated approach. On the basis of given customer preferences, the paper presents a model for determining the number of new products to be introduced, the exact specifications of these products, and the production processes for efficiently delivering these specifications. These decisions are made in an integrated manner by simultaneously considering the interaction among the various choice variables. A decomposition‐based solution procedure is developed that iterates between the product design and process selection decisions while maintaining an effective link between them. In addition to understanding the economic value of adopting the integrated approach to product design, the paper discusses how the proposed model can be used effectively to perform sensitivity analysis with respect to some of the important decision variables.