Product Family and Platform Portfolio Optimization

Abstract

In this paper, a methodology is presented to determine the optimum number of product platforms to maximize overall product family profit with simplifying assumptions. This methodology is attempting to aid various manufacturing industries who are seeking ways to reduce product family manufacturing costs and development times through implementation of platform strategies. The methodology is based on a target market segment analysis, market leader’s performance vs. price position, and a two-level optimization approach for platform and variant designs. The proposed methodology is demonstrated for a hypothetical automotive vehicle family that attempts to serve seven different vehicle market segments. It is found that the use of three distinct platforms maximizes overall profit by pursuing primarily a horizontal leveraging strategy.