Planning Renewal of Product Platforms for Managing Technology Obsolescence of a Product Family
In the rapidly changing world, technologies quickly become obsolete and a product should be rapidly innovated. Under the platform-based product development strategy, innovation of a product is dedicated to the innovation of a platform. This study handles the problem of determining the optimal timing of innovating or renewing a product platform. While the frequent platform renewal harms profitability of the whole product family, a long lasting platform makes its derivative products obsolete, and unable to create new demands. In order to find the optimal platform life-time compromising such trade-off, a model for estimating the expected profit gained from a platform during a given life-time is developed. This model assumes that a newer product substitutes the demand for older products, and a platform is less likely to be able to adopt a newly developed technology as its life-time is getting longer. The cumulative sales of derivative products are estimated by a diffusion model, and various cases that a series of derivative products is introduced are examined by dynamic programming approach.