Requirements planning for modular products

The focus of this paper is on determining the requirements of different component options of a modular end-product in an uncertain environment. We explicitly model two distinct sources of uncertainty: stochastic end-product demand and unknown market proportions for the different product options available. Our cost minimizing model focuses on determining the optimal requirements policies for component options that meet a pre-set service level. We show that simple common-sense requirements policies are not generally optimal; there is a non-linear connection between service level and component requirements that is hard to characterize without a detailed analysis.