Module Selection and Supply Chain Optimization for Customized Product Families Using Redundancy and Standardization

In this paper, we study the problem of configuring a product family which has to satisfy diversified customer requirements. Modular design strategies allow a bill of materials to be generated for various finished products from a limited subset of modules. Simultaneously, a production location must be selected for the manufacture of each module. From a product point-of-view, the strategies adopted are often extreme, proposing either the manufacturing of the total diversity (all possible products) or a limited set of standardized products (only a few products are proposed). The objective of this paper is to investigate intermediate cases on this continuum, in order to better understand the potential for profit. Our comparison is based on the product family configuration (selection of the best modules) that minimizes production and transportation costs under time constraints.