Integrating supplier selection in optimal product family design

Abstract

Product family design and supplier selection are traditionally separated in two successive stages. First, product development teams determine optimal levels of the attributes of product components for each product variant of a product family, and purchasing departments then choose the qualified suppliers with the lowest cost. However, decoupling the two decision processes may lead to suboptimal solutions with regard to the total market profit of a company. In this article, a unified optimisation model, which integrates product family design with supplier selection, is established with the objective of maximising the total profit of a product family. Consumer purchase behaviour, supplier availability and outsourcing-related cost are considered in the model. A linear programming embedded genetic algorithm was developed to solve the proposed model. A case study is presented to illustrate the feasibility and effectiveness of the proposed model and algorithms.