Product Upgrades Based on Minimum Expected Quality Loss

摘要

The need to maintain or sustain a product’s usefulness to or beyond its initial lifecycle expectancy is often driven by investment costs, market share, sales revenues, new product release schedules, standardization, uninterruptable usage, or declining budgets. A question then arises as to how often to upgrade a product. Aside from these typically discussed rationales, the paper concludes that a viable approach is to consider the upgrade cycle that results in the minimum cost based on quality. A general quality loss function was developed to investigate the expected quality loss for quality characteristics such as nominal-the-best, smaller-the-best, and larger-the-better. It is shown that when a shape parameter is introduced into the loss function, product upgrade cycles can be managed to minimize the expected losses.