Risk Reduction via Prototyping in Customized Product Development

Risks are inherent in customized product development for both customers and manufacturers due to their inability to accurately articulate requirements and estimate costs, respectively. The presence of risks creates transactional barriers when decision makers are risk averse. Prototyping, commonly used for customer requirements elicitation and manufacturing cost estimation, is interpreted in this paper as a means of risk reduction and modelled via a Bayesian estimation process. A quantitative risk model is subsequently developed to investigate the investment decision upon prototyping, taking into consideration the fidelity and cost of the prototype. This paper provides a decision framework for practitioners to understand and manage transaction risks in customized product development.
Publisher
CIRP
Issue Date
2011
Keywords

Risk reduction; customization; prototype; product development

Citation

21st CIRP Design Conference

URI
http://hdl.handle.net/10203/23701
Appears in Collection
Proceedings of the 21st CIRP Design Conference
Files in This Item
-CIRP-Design-2011-Paper14-Sun-and-Chen.pdf(1.32 MB)Download
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