A mathematical model to determine the optimal size of a product line from the perspective of manufacturing companies

The product line optimization plays a key role to increase the revenue by satisfying consumers´ various needs. While the extant studies have made the approaches from the perspective of consumers, in this paper, we propose a product line design problem from the perspective of manufacturers. The concept of neighborhood is introduced that parameterizes consumers´ tolerance on specification differences. In addition, the maintenance costs are considered in order to cope with the multi-periodic characteristics of the problem. We demonstrated the applicability of the proposed model to a major mobile phone manufacturing company in Korea. The case study shows that the chosen manufacturing company could have reduced the size of its product line by 64.2%, and saved 68.0% of its product line development costs.