Title: Optimal supply chain configuration for platform products: impacts of commonality, demand variability and quantity discount

Authors: George Q. Huang, Xin Yan Zhang, Victor H.Y. Lo

Addresses: Department of Industrial and Manufacturing Systems Engineering, The University of Hong Kong, P. R. China. ' Department of Industrial and Manufacturing Systems Engineering, The University of Hong Kong, P. R. China. ' Department of Industrial and Manufacturing Systems Engineering, The University of Hong Kong, P. R. China

Abstract: This paper deals with the optimal configuration of a multi-stage supply chain for multiple products. We develop a mathematical model for two situations: a single supply chain configured for multiple products sharing a common platform, and multiple supply chains separate for individual products. The model is applied and solved for a case study of a notebook computer manufacturer to study two impacts of product platform commonality. One is the robustness of the supply chain performance against the demand variability and the other is the improvement of the supply chain performance by taking advantage of quantity discounts offered by suppliers. The experimental results have found that the presence of platform commonality encourages the manufacturer to take advantage of the quantity discount to improve its performance. Another important finding is that platform commonality not only improves the supply chain performance (total cost) but also its robustness against the demand variability.

Keywords: platform products; product platforms; supply chain configuration; commonality; quantity discount; demand variability; supply chain management; SCM; notebook computers; mass customisation; supply chain performance; product development.

DOI: 10.1504/IJMASSC.2005.007353

International Journal of Mass Customisation, 2005 Vol.1 No.1, pp.107 - 133

Published online: 11 Jul 2005 *

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