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Parallel and Sequential Testing of Design Alternatives

  • 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)

Registered author(s):

    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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    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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    1. Roger E. Bohn, 1995. "Noise and Learning in Semiconductor Manufacturing," Management Science, INFORMS, vol. 41(1), pages 31-42, January.
    2. Marco Iansiti, 2000. "How the Incumbent Can Win: Managing Technological Transitions in the Semiconductor Industry," Management Science, INFORMS, vol. 46(2), pages 169-185, February.
    3. Robert P. Smith & Steven D. Eppinger, 1997. "A Predictive Model of Sequential Iteration in Engineering Design," Management Science, INFORMS, vol. 43(8), pages 1104-1120, August.
    4. M. L. Weitzman, 1978. "Optimal Search for the Best Alternative," Working papers 214, Massachusetts Institute of Technology (MIT), Department of Economics.
    5. Thomke, Stefan & von Hippel, Eric & Franke, Roland, 1998. "Modes of experimentation: an innovation process--and competitive--variable," Research Policy, Elsevier, vol. 27(3), pages 315-332, July.
    6. Christoph H. Loch & Christian Terwiesch, 1998. "Communication and Uncertainty in Concurrent Engineering," Management Science, INFORMS, vol. 44(8), pages 1032-1048, August.
    7. Stefan H. Thomke, 1998. "Managing Experimentation in the Design of New Products," Management Science, INFORMS, vol. 44(6), pages 743-762, June.
    8. Ulrich, Karl, 1995. "The role of product architecture in the manufacturing firm," Research Policy, Elsevier, vol. 24(3), pages 419-440, May.
    9. Armen A. Alchian, 1950. "Uncertainty, Evolution, and Economic Theory," Journal of Political Economy, University of Chicago Press, vol. 58, pages 211.
    10. Christian Terwiesch & Christoph H. Loch, 1999. "Measuring the Effectiveness of Overlapping Development Activities," Management Science, INFORMS, vol. 45(4), pages 455-465, April.
    11. Clark, Kim B., 1985. "The interaction of design hierarchies and market concepts in technological evolution," Research Policy, Elsevier, vol. 14(5), pages 235-251, October.
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