Optimal Design Decisions in Product Portfolio Valuation

Abstract

Product portfolio valuation is a core business milestone in a firm’s product development process: Determine what will be the final value to the firm derived from allocating assets into an appropriate product mix. Optimal engineering design typically deals with determining the best product based on technological (and, occasionally, cost) requirements. Linking technological with business decisions allows the firm to follow a product valuation process that directly considers not only what assets to invest but also what are the appropriate physical properties of these assets. Thus, optimal designs are determined within a business context that maximizes the firm’s value. The article demonstrates how this integration can be accomplished analytically using a simple example in automotive product development.