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Parallel and Sequential Testing of Design Alternatives

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Author Info

  • Christoph H. Loch

    ()
    (INSEAD, Boulevard de Constance, 77305 Fontainebleau Cedex, France)

  • Christian Terwiesch

    ()
    (The Wharton School, University of Pennsylvania, Philadelphia, Pennsylvania 19104)

  • Stefan Thomke

    ()
    (Harvard Business School, Soldiers Field, Boston, Massachusetts 02163)

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    Abstract

    An important managerial problem in product design in the extent to which testing activities are carried out in parallel or in series. Parallel testing has the advantage of proceeding more rapidly than serial testing but does not take advantage of the potential for learning between tests, thus resulting in a larger number of tests. We model this trade-off in the form of a dynamic program and derive the optimal testing strategy (or mix of parallel and serial testing) that minimizes both the total cost and time of testing. We derive the optimal testing strategy as a function of testing cost, prior knowledge, and testing lead time. Using information theory to measure the test efficiency, we further show that in the case of imperfect testing (due to noise or simulated test conditions), the attractiveness of parallel strategies decreases. Finally, we analyze the relationship between testing strategies and the structure of design hierarchy. We show that a key benefit of modular product architecture lies in the reduction of testing cost.

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    File URL: http://dx.doi.org/10.1287/mnsc.47.5.663.10480
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    Bibliographic Info

    Article provided by INFORMS in its journal Management Science.

    Volume (Year): 47 (2001)
    Issue (Month): 5 (May)
    Pages: 663-678

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    Handle: RePEc:inm:ormnsc:v:47:y:2001:i:5:p:663-678

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    Related research

    Keywords: Testing; Prototyping; Learning; Optimal Search; Modularity;

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    Cited by:
    1. Gambardella, Alfonso, 2013. "The economic value of patented inventions: Thoughts and some open questions," International Journal of Industrial Organization, Elsevier, vol. 31(5), pages 626-633.
    2. Sendil K. Ethiraj & Daniel Levinthal, 2003. "Modularity and Innovation in Complex Systems," LEM Papers Series 2003/15, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    3. Alfonso Gambardella & Marco Giarratana, 2004. "Chandlerian Firms vs. Entrepreneurship," LEM Papers Series 2004/12, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    4. von Hippel, Eric & Franke, Nikolaus & Prügl, Reinhard, 2009. "Pyramiding: Efficient search for rare subjects," Research Policy, Elsevier, vol. 38(9), pages 1397-1406, November.
    5. Sylvain Lenfle, 2011. "The strategy of parallel approaches in projects with unforeseeable uncertainty: the Manhattan case in retrospect," Post-Print hal-00658346, HAL.
    6. Baldwin, Carliss & Hienerth, Christoph & von Hippel, Eric, 2006. "How user innovations become commercial products: A theoretical investigation and case study," Research Policy, Elsevier, vol. 35(9), pages 1291-1313, November.
    7. Lin, Shu-Jou & Lee, Ji-Ren, 2011. "Configuring a corporate venturing portfolio to create growth value: Within-portfolio diversity and strategic linkage," Journal of Business Venturing, Elsevier, vol. 26(4), pages 489-503, July.
    8. Plambeck, Erica L. & Taylor, Terry A., 2004. "Partnership in a Dynamic Production System," Research Papers 1892, Stanford University, Graduate School of Business.
    9. Schmickl, Christina & Kieser, Alfred, 2008. "How much do specialists have to learn from each other when they jointly develop radical product innovations?," Research Policy, Elsevier, vol. 37(3), pages 473-491, April.

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