Optimal supply chain configuration for platform products: impacts of commonality, demand variability and quantity discount

Abstract

This paper deals with the optimal configuration of a multi-stage supply chain for multiple products. We develop a mathematical model for two situations: a single supply chain configured for multiple products sharing a common platform, and multiple supply chains separate for individual products. The model is applied and solved for a case study of a notebook computer manufacturer to study two impacts of product platform commonality. One is the robustness of the supply chain performance against the demand variability and the other is the improvement of the supply chain performance by taking advantage of quantity discounts offered by suppliers. The experimental results have found that the presence of platform commonality encourages the manufacturer to take advantage of the quantity discount to improve its performance. Another important finding is that platform commonality not only improves the supply chain performance (total cost) but also its robustness against the demand variability.

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