Optimal platform investment for product family design

Existing models for developing modular product families based on a common platform are either too engineering oriented or too marketing centric. In this paper, we propose an intermediate modeling ground that bridges this gap by simultaneously considering essential concepts from engineering and marketing to construct an alternative model for platform-based product families. In this model, each variant (in the platform-based product family) contributes a percentage to overall market coverage inside a target market segment. The extent to which a specific variant contributes to market coverage is linked to its degree of distinctiveness. On the other hand the cost of development of all variants (that constitute the product family) is also dependent on the degree of commonality between these variants. The objective of the model is to maximize market coverage subject to an available development budget. Based on a conceptual design of the product family, the proposed model suggests the optimal initial investment in the platform, the commonality level between variants, and the number of variants to be produced in order to maximize market coverage using both analytical and simulation techniques. An application example using an ice scraper product family is included to demonstrate the proposed model.