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1) a set of possible features to include in any product/design,
each feature has an incremental cost.
2) a set of market segments, each segment has:
a demand volume,and
a subset of the features that are needed by this segment.
We want to create a set of one or more designs.
Each design contains a subset of all possible features.
The cost per unit of a specific design is the sum of incremental cost of all features included in the design.
Each market segment will be assigned to the design with the lowest cost per unit that contains at least all the features needed by that segment.
The volume of a design is the sum of the demand volumes of all market segments assigned to the design.
We typically do not want to have more than two or three designs.
With a limited number of designs, we waste money on a segment if the design assigned to that segment contains more features than the segment requires.
We want to find the cheapest set of designs that satisfies all the segment demands.
Choosing wire harness configurations(designs) for a family of automobiles. Each automobile type has a forecast total demand as well as a set of features needed in its wire harness, e.g., power moon roof, heated seats, trailer power connector, etc. .
We typically want to have fewer wire harness types than automobile types. So which harness configurations should we choose, so that for each automobile there is a least one wire harness design that has all the required features?;