Evaluation of product-platform decisions based on total supply chain costs

Over the past decades, several companies have introduced product platforms in the design of their products in order to produce a large product variety in a cost-efficient way. However, for some companies, the introduction of platforms ended up being more costly than expected, leading them to reconsider their platform decisions. In this paper, we develop a model to support companies in determining (1) how many platforms to develop, (2) which platforms to develop and (3) which products to derive from which platforms. The model takes into account the impact of these product-platform decisions on a company's relevant supply chain activities and costs. The model shows how the optimal product-platform decisions depend on the trade-off between the costs of platforms versus the costs of customising these platforms to final product variants. We propose a simulated annealing algorithm to solve large problem instances within reasonable time. The practical validity of our model is shown through its application in a global technology company specialised in the development and production of medical screens.