Marketing/Manufacturing Trade-Offs in Product Line Management

A critical decision facing firms across industries is the selection of a mix of products to offer in the marketplace. Both in practice and in the academic literature, the product line design problem has typically been considered from a marketing perspective, with a focus on how alternative sets of products interact and compete in the marketplace. The operational implications of product line decisions have been largely ignored, even while the importance and complexity of interactions among products in the manufacturing environment increase with broadening product lines. Furthermore, consideration of manufacturing synergies among products in product line design is increasingly beneficial given efforts in many industries to improve co-ordination of manufacturing activities across products. In this work we examine the benefits of integrating marketing implications of product mix with more detailed manufacturing cost implications. Traditional product line models are extended to capture both individual product costs and relevant cost interactions among products. The relevant marketing and manufacturing elements are considered in a mathematical programming formulation that identifies a profit maximizing mix of products. The resulting normative model of the product line design problem is used to generate insights into important cross-functional issues in product line management. Specifically, we examine the impact of alternative manufacturing environment characteristics on the composition of the optimal product line.     

Product portfolio planning: a metaheuristic-based simulated annealing algorithm

Product portfolio diversity is prominent for customers, but critical for manufacturers. From the manufacturers’ perspective, diversity must be maintained at a level where engineering costs do not exceed the acquired advantages of increased market share. Therefore, in this paper we consider the problem of product portfolio planning to simultaneously maximise market share and minimise manufacturing engineering costs. Since this problem belongs to the NP-hard class of problems, exact algorithms are incapable of rendering an optimal solution. Therefore, we used metaheuristic-based simulated annealing to deal with the problem. Our proposed algorithm consists of two parts, i.e. a random search and a predetermined rule to generate the next possible neighbours (product portfolio). In order to have a robust algorithm, we calibrated different levels of our problem's parameters using the Taguchi method. This method picks the best levels of different parameters, conducting the least possible experiments. To evaluate the performance of our proposed algorithm, we compared it with a strong algorithm – the genetic algorithm. We used this comparison as the basis of our research. The obtained computational results clearly demonstrate the efficiency and effectiveness of our proposed algorithm.     

Comprehensive framework for the development of a supply chain strategy

Current competition among companies is fought through their supply chains. As the performance of the supply chain depends not only on manufacturing and marketing attributes, it becomes necessary to establish a framework upon which to develop a supply chain strategy. The paper presents the rationale and principles of a customer–product–process–resource (CPPR) framework for the simultaneous analysis of the business, supplier, manufacturing, planning, marketing and customer dimensions of a supply chain strategy. The originality of the CPPR framework is that it establishes a set of supply chain structural elements, that when put together determine the degree of alignment of a supply chain strategy. As the main objective of a supply chain strategy is to achieve customer satisfaction as an output of the supply chain operations, the CPPR framework becomes a realignment tool when used in combination with a realignment methodology, which is also presented in the paper.     

An evolutionary approach for product line adaptation

A product line is rarely designed from scratch but usually evolves with products phased in and phased out. The adaptations of a product line and the associated changes in product mix and prices have complicated implications upon both market demand and manufacturing cost. This paper proposes an evolutionary approach to support coordinated decision-making among marketing, engineering and manufacturing regarding product line adaptation. A mixed logit discrete choice model and an activity based costing model are developed to quantify the demand and cost implications of product line adaptation, respectively. Product line adaptation is then formulated as a mixed integer non-linear programming problem. Given the coexistence of both discrete and continuous variables, a bi-level optimisation procedure combining genetic algorithm and differential evolution is developed for problem-solving. The proposed methodology is illustrated with an example of netbook product line design.     

Fuzzy expected value modelling approach for determining target values of engineering characteristics in QFD

Quality function deployment (QFD) is a planning and problem-solving tool that is renowned for translating customer requirements into the technical attributes of a product. To deal with the imprecise elements in the development process, fuzzy set theory is incorporated into QFD methodology. A novel fuzzy expected value operator approach is proposed in this paper to model the QFD process in a fuzzy environment, and two fuzzy expected value models are established to determine the target values of engineering characteristics in handling different practical design scenarios. Analogous to stochastic programming, the underlying philosophy in the proposed approach is based on selecting the decision with maximum expected returns. Furthermore, the proposed approach considers not only the inherent fuzziness in the relationships between customer requirements and engineering characteristics, but also the correlation among engineering characteristics. These two kinds of fuzzy relationships are aggregated to give the fuzzy importance of individual engineering characteristics. Finally, an example of a quality improvement problem of a motor car design is given to demonstrate the application and performance of the proposed modelling approach.     

Optimising resource portfolio planning for capital-intensive industries under process-technology progress

This paper addresses the problem of resource portfolio planning of firms in high-tech, capital-intensive manufacturing industries. In light of the strategic importance of resource portfolio planning in these industries, we offer an alternative approach to modelling capacity planning and allocation problems that improves the deficiencies of prior models in dealing with three salient features of these industries, i.e. fast technological obsolescence, volatile market demand, and high capital expenditure. This paper first discusses the characteristics of resource portfolio planning problems including capacity adjustment and allocation. Next, we propose a new mathematical programming formulation that simultaneously optimises capacity planning and task assignment. For solution efficiency, a constraint-satisfied genetic algorithm (CSGA) is developed to solve the proposed mathematical programming problem on a real-time basis. The proposed modelling scheme is employed in the context of a semiconductor testing facility. Experimental results show that our approach can solve the resource portfolio planning problem more efficiently than a conventional optimisation solver. The overall contribution is an analytical tool that can be employed by decision makers responding to the dynamic technological progress and new product introduction at the strategic resource planning level.     

Coordinated optimisation of platform-driven product line planning by bilevel programming

Product line planning (PLP) aims at an optimal combination of product feature offerings, suggesting itself to be a determinant decision for a company to satisfy diverse customer needs and gain competitive advantages. Fulfilment of planned product lines must make trade-offs between product variety and production costs. To balance the costs of product lines, manufacturers often adopt a product platform configuration (PPC) approach to redesign product and process platforms by adding new modules to the legacy platforms. The PPC is an effective means of providing product variety while controlling the manufacturing costs. The PLP and PPC problems have traditionally been investigated separately in the marketing research and engineering design fields. It is important to coordinate PLP and PPC decisions within a coherent optimisation framework. This paper proposes a bilevel mixed 0–1 nonlinear programming model to formulate coordinated optimisation for platform-driven product line planning. The upper level deals with the PLP problem by maximising the profit of an entire product line, whilst the lower level copes with the multiple product platforms optimisation for the optimal PPC in accordance with the upper level decisions of product line structure. To solve this bilevel programming model, a bilevel genetic algorithm is developed to find the optimal solution. A case study of coordinated optimisation between an automobile line and its product platforms is presented to demonstrate the feasibility and effectiveness of the proposed bilevel programming in comparison with a typical ‘all-in-one’ approach and a non-joint optimisation programming.     

Modelling and integration of customer flexibility in the order commitment process for high mix low volume production

With increasing product variety and dynamic demand fluctuation, manufacturing industry is moving towards a high product mix and low order volume production environment. Consequently, the order commitment process is becoming one of the most important processes for manufacturing firms to meet individual customer's needs with limited resources. However, demands for shortened delivery lead time, diverse customer requirements and more frequent customer orders have made the order commitment task more challenging. This paper attempts to tackle these new challenges by incorporating not only manufacturing flexibility but also flexibility from the demand side. Customer flexibility is characterised by customer indifference to certain product attributes and/or delivery schedules. Intuitively, with the consideration of customer flexibility, both manufacturers’ and customers’ interests can be better served since the solution space of matching demand and supply can be extended beyond the traditional domain purely from a manufacturing perspective. To this end, a systematic approach is developed to characterise and model customer flexibility. A mixed-integer-programming model is formulated to provide optimal order commitment decisions.     

Distributed product and facility prototyping in extended manufacturing enterprises

In order to reduce the cost at the early product development stages, the planners need methodologies and tools that would allow them to judge upon the implications of the product design on the required manufacturing processes and facilities for their production. This paper reports on a new theoretical platform and a pilot implementation of a decision-making environment for distributed product and facility prototyping in an extended enterprise. The approach is based on an exchange of requests and information between collaborative autonomous agents that support the design, manufacturing planning and facility formation activities. The decision-making is formalized as iterative matching of design, process and facility attributes using multilevel resource capability representation within the extended enterprise. The system is implemented as an XML/CORBA-based environment for conveying design and manufacture messages across traditional technology boundaries. The reported research aims to provide the designers with a rapid manufacturing feasibility assessment tool to be used at different design and planning stages in extended manufacturing enterprises.     

Managing production level in new product diffusion: an agent-based simulation approach

Managing production level after the launch of a new product is a challenging problem and is critical to the overall profit of manufacturing firms. The problem involves concepts from different fields including production planning, manufacturing flexibility, forecasting, and marketing. In this paper, the gaps in the existing literature are first illustrated. With the goal of addressing the identified research gaps, agent-based modeling and simulation is employed to analyze the performance of different production planning strategies under various levels of volume flexibility and consumer social network structures. The key distinguishing feature of the developed model is the capability of the manufacturing firm to adjust its production level by forecasting the future demand. The analysis of the simulation outputs yields substantial results by challenging some intuitive and traditional understandings of manufacturing systems. The paper also provides a discussion on managerial implications of the results in order to provide the managers with guidelines on the implementation of the model in real-world diffusion environments.     

Analytic hierarchy process-based approach for selecting a Pareto-optimal solution of a multi-objective,multi-site supply-chain planning problem

The current manufacturing environment has changed from traditional single-plant to multi-site supply chain where multiple plants are serving customer demands. In this article, a tactical multi-objective, multi-period, multi-product, multi-site supply-chain planning problem is proposed. A corresponding optimization model aiming to simultaneously minimize the total cost, maximize product quality and maximize the customer satisfaction demand level is developed. The proposed solution approach yields to a front of Pareto-optimal solutions that represents the trade-offs among the different objectives. Subsequently, the analytic hierarchy process method is applied to select the best Pareto-optimal solution according to the preferences of the decision maker. The robustness of the solutions and the proposed approach are discussed based on a sensitivity analysis and an application to a real case from the textile and apparel industry.     

Fuzzy multiple objective decision making approach to prioritize design requirements in quality function deployment

Quality function deployment (QFD) is a customer-oriented design tool for developing new or improved products to increase customer satisfaction by integrating marketing, design engineering, manufacturing, and other related functions of an organization. QFD focuses on delivering value by taking into account customer needs and then deploying this information throughout the development process. Although QFD aims to maximize customer satisfaction, technology and cost considerations limit the number and the extent of the possible design requirements that can be incorporated into a product. This paper presents a fuzzy multiple objective programming approach that incorporates imprecise and subjective information inherent in the QFD planning process to determine the level of fulfilment of design requirements. Linguistic variables are employed to represent the imprecise design information and the importance degree of each design objective. The fuzzy Delphi method is utilized to achieve the consensus of customers in determining the importance of customer needs. A pencil design example illustrates the application of the multiple objective decision analysis.     

基于优化的产品平台参数规划方法

 为满足客户化和全球竞争的需求,企业要实现大规模定制(mass customization,MC).基于公共产品平台的产品族设计是实现大规模定制的一种有效方式,而平台规划是面向产品族设计方法学的核心内容,也是目前研究中的一个热点问题.基于模型参数的平台设计是其方法之一.针对基于一系列标准可变参数的产品平台,用优化方法对产品平台参数进行规划,以满足各种客户需求.该规划方法无需事先人为指定,而是在满足客户需求的前提下,尽可能提高产品族中设计变量的共性,从而确定最好的产品平台的公共参数及其最优值,以及个性参数及其变化值,并以带式输送机为例验证了该方法.     

Modelling of quality function deployment planning with resource allocation

Quality Function Deployment (QFD) is a well-known customer-oriented methodology, which is widely used to assist decision making in product design and development in various types of production. Determining how and to what extent certain characteristics or technical attributes (TAs) of products are to be met, with a view to gaining a higher level of overall customer satisfaction, is a key success factor in product design and development. An operational QFD planning problem with resource allocation is considered in this paper. The aim is to plan the attainment of TAs by allocating resources among the TAs with a view to achieving maximized overall customer satisfaction. Taking into account the technical and resource constraints, and the impact of the correlation among TAs, the operational QFD planning with resource allocation is formulated as a linear program and solved by a heuristics-combined Simplex Method. An overall procedure is presented to help a design team to implement this QFD design planning with resource allocation in practice. This model can bridge the gap and conflicts between the design targets at the strategic level, and resource allocations in the part deployment and operational process planning level.     

A fuzzy expected value-based goal programing model for product planning using quality function deployment

Product planning is one of four important processes in new product development using quality function deployment (QFD), which is a widely used customer-driven approach. In this article, a hierarchical framework for product planning using QFD is developed. To tackle the fuzziness in functional relationships between customer requirements and engineering characteristics (ECs) in product planning, the least squares method is incorporated into fuzzy regression to investigate those functional relationships, by which a more central tendency can be obtained. Furthermore, a fuzzy expected value-based goal programing model is proposed to specify target values of ECs. Different from some fuzzy product planning approaches for QFD, the proposed programing model has unambiguous interpretations. An illustrated example of a quality improvement problem of emulsification dynamite-packing machine design is given to demonstrate the application and performance of the proposed approach.     

A methodology of integrating affective design with defining engineering specifications for product design

Affective design and the determination of engineering specifications are commonly conducted separately in early product design stage. Generally, designers and engineers are required to determine the settings of design attributes (for affective design) and engineering requirements (for engineering design), respectively, for new products. Some design attributes and some engineering requirements could be common. However, the settings of the design attributes and engineering requirements could be different because of the separation of the two processes. In previous studies, a methodology that considers the determination of the settings of the design attributes and engineering requirements simultaneously was not found. To bridge this gap, a methodology for considering affective design and the determination of engineering specifications of a new product simultaneously is proposed. The proposed methodology mainly involves generation of customer satisfaction models, formulation of a multi-objective optimisation model and its solving using a chaos-based NSGA-II. To illustrate and validate the proposed methodology, a case study of mobile phone design was conducted. A validation test was conducted and the test results showed that the customer satisfaction values obtained based on the proposed methodology were higher than those obtained based on the combined standalone quality function deployment and standalone affective design approach.     

Decision-Analytic Methodology for Cost-Benefit Evaluation of Diagnostic Testers

A modular influence diagram model is proposed as a decision-analytic framework for reasoning about diagnostic testing in the manufacture of mechanical products. The influence diagram ties product design, manufacturing, and testing decisions to field quality, costs and risks. The decision-analytic theory of “expected value of information” is used to evaluate the cost-benefit of alternate testing systems. The structure of the model highlights research directions for engineering economics in evaluating cost-benefit tradeoffs in the product cycle from design, to manufacturing, marketing and field service. An implementation in the IDES (Influence Diagram Based Expert System) illustrates the potential of applying such a planning model to real-time diagnostic decisions in the manufacture of mechanical components for high-speed printers.     

Multi-objective master production scheduling in make-to-order manufacturing

In this paper a multi-objective, long-term production scheduling in make-to-order manufacturing is considered and a lexicographic approach with a hierarchy of integer programming formulations is proposed. The problem objective is to allocate customer orders with various due dates among planning periods with limited capacities to minimize the number of tardy orders as a primary optimality criterion. Then, the maximum level of the input and output inventory is minimized as a secondary criterion, and finally the aggregate production is leveled over the planning horizon as an auxiliary criterion. A close relation between minimizing the maximal inventory and the maximum earliness of customer orders is shown and used to simplify the inventory leveling problem. Numerical examples, modeled after a real-world make-to-order flexible flowshop in a high-tech industry, are provided and some computational results are reported. The paper indicates that the maximum earliness of customer orders is an important managerial decision variable, and its minimum value can be applied to control the inventory of purchased materials and finished products to maximize the customer service level and minimize production costs.     

Implications of postponement for the supply chain

As a marketing, logistics and manufacturing concept, postponement has been around in the literature for a long time. Its application can also be dated to the 1920s. However, only in recent times has it been used as a supply chain strategy. Postponement fosters a new way of thinking about product design, process design and supply chain management. In this paper, we rethink the supply chain from a postponement point of view and present the implications of postponement for the decoupling point, supply chain integration, control of the supply chain and capacity planning issues. The objective is to extend the significance of postponement towards the perspective of a holistic supply chain context.     

Application of knowledge-based artificial immune system (KBAIS) for computer aided process planning in CIM context

In the present era, several manufacturing philosophies like lean manufacturing, total quality management (TQM), etc., have the goal of providing a quality product at reduced cost. In this research paper the process planning problem of a CIM system has been discussed where minimisation of cost of the finished product is considered as the main objective. For determining the cost of the finished product, scrap cost, forgotten by most of the previous researchers, has been considered along with other costs like raw material cost, processing cost, etc. In the present environment of concurrent engineering, optimisation of process planning is an NP-hard problem. To solve this complex problem a noble search algorithm, known as knowledge-based artificial immune system (KBAIS) has been proposed. The nobility of the proposed algorithm is that the inherent capability of AIS has been gleaned and incorporated with the property of the knowledge base. In this problem, the power of knowledge has been used for three stages in the algorithm: initialisation, selection and hyper-mutation. To demonstrate the efficacy of the proposed KBAIS, a bench mark problem has been considered. Intensive computational experiments have also been performed on randomly generated datasets to reveal the supremacy of the proposed algorithm over other existing heuristics.