Platform replacement planning for management of product family obsolescence

Abstract

In our rapidly changing world, existing technologies quickly obsolesce and new technologies continually emerge. While it is desirable that product platforms are designed for long life spans, state-of-the-art products cannot be developed on platforms with obsolete technologies. The purpose of this study is to develop a model to determine the optimal lifetime of platforms trading-off the cost efficiency of platform development and lost sales due to obsolete technologies. In order to predict sales revenue with respect to platform lifetime, a stochastic product introduction model is developed based on a diffusion model. A computational analysis is performed to reveals the influence of platform features and the market situation on the optimal lifetime and profitability of platforms. Furthermore, the economic value of retarding the speed of obsolescence is assessed in order to glean insights into the design of a robust or flexible platform.