A Stackelberg game theoretic model for optimizing product family architecting with supply chain consideration

Wang, D., Du, G., Jiao, R.J., Wu, R.Y., Yu, J. and Yand, D. 2016. A Stackelberg game theoretic model for optimizing product family architecting with supply chain consideration. International Journal of Production Economics. 172, pp. 1-18. doi:10.1016/j.ijpe.2015.11.001

TitleA Stackelberg game theoretic model for optimizing product family architecting with supply chain consideration
AuthorsWang, D., Du, G., Jiao, R.J., Wu, R.Y., Yu, J. and Yand, D.
Abstract

Planning of an optimal product family architecture (PFA) plays a critical role in defining an organization's
product platforms for product variant configuration while leveraging commonality and variety. The focus
of PFA planning has been traditionally limited to the product design stage, yet with limited consideration
of the downstream supply chain-related issues. Decisions of supply chain configuration have a profound
impact on not only the end cost of product family fulfillment, but also how to design the architecture of
module configuration within a product family. It is imperative for product family architecting to be
optimized in conjunction with supply chain configuration decisions. This paper formulates joint optimization of PFA planning and supply chain configuration as a Stackelberg game. A nonlinear, mixed
integer bilevel programming model is developed to deal with the leader–follower game decisions
between product family architecting and supply chain configuration. The PFA decision making is
represented as an upper-level optimization problem for optimal selection of the base modules and
compound modules. A lower-level optimization problem copes with supply chain decisions in accordance with the upper-level decisions of product variant configuration. Consistent with the bilevel
optimization model, a nested genetic algorithm is developed to derive near optimal solutions for PFA and
the corresponding supply chain network. A case study of joint PFA and supply chain decisions for power
transformers is reported to demonstrate the feasibility and potential of the proposed Stackelberg game
theoretic joint optimization of PFA and supply chain decisions.

KeywordsProduct family architecting, Supply chain configuration, Stackelberg game, Bilevel optimization, Nested genetic algorithm
JournalInternational Journal of Production Economics
Journal citation172, pp. 1-18
ISSN0925-5273
Year2016
PublisherElsevier
Accepted author manuscriptWang et al (2016) IJPE.pdf
Digital Object Identifier (DOI)doi:10.1016/j.ijpe.2015.11.001
Publication dates
Published10 Nov 2015

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