An Optimization Framework for Product Design

An important problem in the product design and development process is to use the part-worths preferences of potential customers to design a new product such that market share is maximized. The authors present a new optimization framework for this problem, the nested partitions (NP) method. This method is globally convergent and may utilize existing heuristic methods to speed its convergence. We incorporate several known heuristics into this framework and demonstrate through numerical experiments that using the NP method results in superior product designs. Our numerical results suggest that the new framework is particularly useful for designing complex products with many attributes.