Simultaneous Optimization of Product Configuration and Supply Chain Planning with Customer's Participation in Product Design

Abstract

In this paper, we propose a simultaneous optimization model for product configuration and supply chain planning that can reflect customer’s participation in product design. A game theoretical model is developed to derive the equilibrium of the decision-makers with different objectives. The simultaneous optimization problem is formulated as a bilevel programming problem where the customer is a leader and the manufacturer is a follower. The effectiveness of the proposed model is confirmed from computational experiments.