Planning Renewal of Product Platforms for Managing Technology Obsolescence of a Product Family

DS 58-3: Proceedings of ICED 09, the 17th International Conference on Engineering Design, Vol. 3, Design Organization and Management, Palo Alto, CA, USA, 24.-27.08.2009

Year: 2009
Editor: Norell Bergendahl, M.; Grimheden, M.; Leifer, L.; Skogstad, P.; Lindemann, U.
Author: Kang, Changmuk; Hong, Yoo S.
Section: Design Organization and Management
Page(s): 109-120

Abstract

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.

Keywords: Platform renewal, optimal platform life-time, technology obsolescence, diffusion model, dynamic programming

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