SUMMARY

Mass customization leads to product proliferation which takes the advantage of mass production efficiency to satisfy individual customer needs. The variety of products may also diminish the value because of the increasing costs due to growth of product complexity and decrease of manufacturing efficiency, etc. Moreover, mass customization can also cause mass confusion. Therefore, companies should offer proper product varieties to the target market. Therefore, product line planning aims at optimal planning of product variety. Product line planning involves trade-offs between the marketing and engineering perspectives. The marketing concern focuses on maximizing customer perceived value; the engineering concern focuses on minimizing engineering cost. Rather than aggregating both problems as one single level optimization problem, the marketing and engineering concerns entail a non-collaborative game per se. In additional, traditional product line planning problem develop new product line based on attributes without considering existing product line. However, in reality, almost all new product lines are evolved from existing product line, which leads to product line evolution problem. This research investigates a game-theoretic approach to the product line evolution problem. A leader-follower joint optimization model is developed to leverage conflicting goals of marketing and engineering within a coherent framework of game theoretic optimization. To solve the joint optimization model efficiently, a bi-level nested genetic algorithm is developed. A case study of smart watch product line evolution is reported to illustrate the feasibility and potential of the proposed approach.