An integrated latent variable choice modeling approach for enhancing product demand modeling

Henk Jan Wassenaar, Wei Chen*, Jie Cheng, Agus Sudjianto

*Corresponding author for this work

Research output: Contribution to conferencePaper

32 Scopus citations

Abstract

In today's highly competitive economy it is increasingly important to consider customer desires in engineering design on a systems level, that is, there is a need for integrating business decision-making and engineering decision-making. Building upon the earlier work on using the discrete choice analysis approach to demand modeling, in this work, the discrete choice analysis method is enhanced by introducing latent variables to include the customer's attitude and perception in a demand model. The latent variable approach better captures psychological factors that affect the purchase behavior of customers and facilitates the understanding of the relationship between customers' desires and product features. The approach is expected to enhance the predictive accuracy of demand models and help verify a designer's intent by assessing the contributions of various product attributes to the customer's perceived product performance. In this work, the existing binary latent variable discrete choice model is extended for multinomial choice and the mathematical formulation is developed to integrate a latent variable model and a multinomial logit choice model. The demand modeling of passenger vehicles with emphasis on studying the impact of engine design attributes is used to demonstrate the potential of the proposed approaches. It is important to keep in mind that the example's emphasis is on demonstrating the approaches rather than the results per se.

Original languageEnglish (US)
Pages373-382
Number of pages10
StatePublished - Dec 1 2004
Event2004 ASME Design Engineering Technical Conferences and Computers and Information in Engineering Conference - Salt Lake City, UT, United States
Duration: Sep 28 2004Oct 2 2004

Other

Other2004 ASME Design Engineering Technical Conferences and Computers and Information in Engineering Conference
CountryUnited States
CitySalt Lake City, UT
Period9/28/0410/2/04

Keywords

  • Decision-based design
  • Demand modeling
  • Discrete choice analysis
  • Latent variable analysis
  • Vehicle design

ASJC Scopus subject areas

  • Modeling and Simulation
  • Mechanical Engineering
  • Computer Science Applications
  • Computer Graphics and Computer-Aided Design

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    Wassenaar, H. J., Chen, W., Cheng, J., & Sudjianto, A. (2004). An integrated latent variable choice modeling approach for enhancing product demand modeling. 373-382. Paper presented at 2004 ASME Design Engineering Technical Conferences and Computers and Information in Engineering Conference, Salt Lake City, UT, United States.