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Design Commonality to Reduce Multi-Item Inventory: Optimal Depth of a Product Line

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  • David P. Rutenberg

    (Carnegie-Mellon University, Pittsburgh, Pennsylvania)

Abstract

The problem of commonality is posed as a problem of economic balance. It involves the disutility of refusing to provide each segment of customers with an item fitting its exact requirements versus economies of scale achieved in producing and inventorying each item. The depth of the product line (the optimal number of items to produce) is determined by finding the minimum concave cost flow through a network. An efficient dynamic program (developed in production smoothing) is used to find this flow. Many products consist of interacting subassemblies; such multistage problems of finding the number of types of each subassembly can also be solved; a computational procedure is developed and an example presented. Along with modularity and cannibalization, multistage commonality is an essential component of a theory of efficient engineering design.

Suggested Citation

  • David P. Rutenberg, 1971. "Design Commonality to Reduce Multi-Item Inventory: Optimal Depth of a Product Line," Operations Research, INFORMS, vol. 19(2), pages 491-509, April.
    • Handle: RePEc:inm:oropre:v:19:y:1971:i:2:p:491-509
    DOI: 10.1287/opre.19.2.491
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    Cited by:

    1. Jans, Raf & Degraeve, Zeger & Schepens, Luc, 2008. "Analysis of an industrial component commonality problem," European Journal of Operational Research, Elsevier, vol. 186(2), pages 801-811, April.
    2. Gnanendran, K. & Ho, J. K. & Sundarraj, R. P., 2003. "Stock selection heuristics for interdependent items," European Journal of Operational Research, Elsevier, vol. 145(3), pages 585-605, March.
    3. Menezes, Mozart B.C. & Ruiz-Hernández, Diego & Guimaraes, Renato, 2016. "The component commonality problem in a real multidimensional space: An algorithmic approach," European Journal of Operational Research, Elsevier, vol. 249(1), pages 105-116.
    4. Eva Labro, 2004. "The Cost Effects of Component Commonality: A Literature Review Through a Management-Accounting Lens," Manufacturing & Service Operations Management, INFORMS, vol. 6(4), pages 358-367, June.
    5. Pentico, David W., 2008. "The assortment problem: A survey," European Journal of Operational Research, Elsevier, vol. 190(2), pages 295-309, October.
    6. Kamalini Ramdas & Taylor Randall, 2008. "Does Component Sharing Help or Hurt Reliability? An Empirical Study in the Automotive Industry," Management Science, INFORMS, vol. 54(5), pages 922-938, May.
    7. Kamalini Ramdas & Marshall Fisher & Karl Ulrich, 2003. "Managing Variety for Assembled Products: Modeling Component Systems Sharing," Manufacturing & Service Operations Management, INFORMS, vol. 5(2), pages 142-156, November.

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