A Stackelberg game theoretic model for optimizing product family architecting with supply chain consideration

Danping Wang, Gang Du, Roger J. Jiao, Ray Wu, Jianping Yu and Dong Yang

International Journal of Production Economics, 2016, vol. 172, issue C, 1-18

Abstract: Planning of an optimal product family architecture (PFA) plays a critical role in defining an organization׳s product platforms for product variant configuration while leveraging commonality and variety. The focus of PFA planning has been traditionally limited to the product design stage, yet with limited consideration of the downstream supply chain-related issues. Decisions of supply chain configuration have a profound impact on not only the end cost of product family fulfillment, but also how to design the architecture of module configuration within a product family. It is imperative for product family architecting to be optimized in conjunction with supply chain configuration decisions. This paper formulates joint optimization of PFA planning and supply chain configuration as a Stackelberg game. A nonlinear, mixed integer bilevel programming model is developed to deal with the leader–follower game decisions between product family architecting and supply chain configuration. The PFA decision making is represented as an upper-level optimization problem for optimal selection of the base modules and compound modules. A lower-level optimization problem copes with supply chain decisions in accordance with the upper-level decisions of product variant configuration. Consistent with the bilevel optimization model, a nested genetic algorithm is developed to derive near optimal solutions for PFA and the corresponding supply chain network. A case study of joint PFA and supply chain decisions for power transformers is reported to demonstrate the feasibility and potential of the proposed Stackelberg game theoretic joint optimization of PFA and supply chain decisions.

Keywords: Product family architecting; Supply chain configuration; Stackelberg game; Bilevel optimization; Nested genetic algorithm (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (12)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:proeco:v:172:y:2016:i:c:p:1-18

DOI: 10.1016/j.ijpe.2015.11.001

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