A Stackelberg game theoretic model for optimizing product family architecting with supply chain consideration

Abstract

Planning of an optimal product family architecture (PFA) plays a critical role in defining an organization's product platforms for product variant configuration while leveraging commonality and variety. The focus of PFA planning has been traditionally limited to the product design stage, yet with limited consideration of the downstream supply chain-related issues. Decisions of supply chain configuration have a profound impact on not only the end cost of product family fulfillment, but also how to design the architecture of module configuration within a product family. It is imperative for product family architecting to be optimized in conjunction with supply chain configuration decisions. This paper formulates joint optimization of PFA planning and supply chain configuration as a Stackelberg game. A nonlinear, mixed integer bilevel programming model is developed to deal with the leader-follower game decisions between product family architecting and supply chain configuration. The PFA decision making is represented as an upper-level optimization problem for optimal selection of the base modules and compound modules. A lower-level optimization problem copes with supply chain decisions in accordance with the upper-level decisions of product variant configuration. Consistent with the bilevel optimization model, a nested genetic algorithm is developed to derive near optimal solutions for PFA and the corresponding supply chain network. A case study of joint PFA and supply chain decisions for power transformers is reported to demonstrate the feasibility and potential of the proposed Stackelberg game theoretic joint optimization of PFA and supply chain decisions.

Value chain and stakeholder‐driven product platform design

“…Numerous studies utilize heuristic algorithms to solve multiobjective product platform and product family design problems to overcome the discrete nature of the product platform design space . Some recent publications extended product platform design and optimization framework to incorporate supply chain, as the platform itself and product variants inevitably affect supply chain operation and costs . Other recent advances in product platform‐related research include establishing a relationship between the product platform and inherent system attributes, such as complexity and changeability, which can be used to optimize product platforms for additional system attributes in addition to commonality and modularity.…”

Effects of demand forecast and resource sharing on collaborative new product development in supply chain

“…Hence TDC would tend to make this a Stackelberg game while engaging in the new product development process (Shiau & Michalek, 2009). This is so because the leader (if aware of his position) always benefits by playing a Stackelberg leader rather than playing a naïve Nash player (Choi, et al, 1990), (Wang, et al, 2016).…”

Genetic Algorithm for Mixed Integer Nonlinear Bilevel Programming and Applications in Product Family Design

“…Based on the relationships among the multiple followers, such MINLBLP problems can be classified as dependent or independent and, for each particular case, there exists a specific model to describe it [23][24][25]. The coupling relationships among the followers are not taken into account for most of the bilevel problems in product family design [26,27]. Therefore, this paper focuses on the MINLBLP with independent followers.…”