Optimal Testing Strategy For Product Design Wei Wang Pengbo Zhang Apr 15 2009 4/15/20091.
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Transcript of Optimal Testing Strategy For Product Design Wei Wang Pengbo Zhang Apr 15 2009 4/15/20091.
Optimal Testing Strategy For Product Design
Wei WangPengbo Zhang
Apr 15 2009
4/15/2009 1
Outline
• Introduction• Pandora’s Box• Role of Learning in sequential testing• More complicated testing strategy
4/15/2009 2
Introduction• Why are new product design testing needed? – Decreased market uncertainty– Optimal candidate solution
• What are sacrificed?– Direct testing cost (Wind tunnel etc.)– Indirect opportunity cost (testing time)
• How are tests carried out ?– Sequential – Parallel – Mixed
• Optimal testing strategy needed!4/15/2009 3
Pandora’s Problem• n closed boxes• Box i contains reward xi with distribution Fi(xi)
independent of all others• x0 initial wealth to start • Cost ci to open box i with a time lag of ti
• Benefits discounted at rate r• Pandora opens one box at each stage • She can choose to stop searching and collect at
that time the maximum reward thus far uncovered• Wanted: A sequential decision rule that can
maximize the expected discounted value4/15/2009 4
Formulation
4/15/2009 5
Learning• Erat, S., Kavadias S., Sequential Testing of Product
Designs: Implications for Learning, 2008• Pandora’s Box assumes all testings (opening a box)
are independent• Interactions between design attributes and
similarities between design configurations• Outcome from testing one configuration relevant in
understanding and predicting the performance of subsequent tests
• Similar DP formulation with correlation/covariance matrix added to model transferable learning
4/15/2009 6
Formulation
4/15/2009 7
Testing Strategies• Loch et al. Parallel and sequential testing of
design alternatives, 2001
Parallel testingProceeding more rapidlyGood when lead time is important
Sequential testingLearning, lower costGood when cost per test is important
4/15/2009 8
Formulation
4/15/2009 9
Formulation
4/15/2009 10