Optimal Configuration of Components in Multigeneration Products

The aim of any firm is to maximize its profitability by utilizing the available resources in the most efficient way. Most firms today are price takers; hence cost minimization plays a very important role in increasing profits. The multigeneration product approach as described in previous research on the topic is one way to reduce total cost of a product family. The research took into consideration a single component in a product. But in a product, there are multiple technology based parts which can undergo changes over its lifetime thereby transcending multiple generations. This paper tries to encompass all the technology based components in a product and determine the optimal combination, which generates the maximum profit to the firm. Hence, it becomes imperative to identify which component needs to be over-engineered to which generation so that the final product cost is minimized. Here we also take into consideration two important constraints any organization will have. One is the monetary resources or capital than a firm can commit to product development and the other is time available for development activities. Multigenerational approach helps not only to reduce costs, but also to increase the responsiveness of firm with respect to market demand.