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Working Papers (1996), ESSEC Business School

Effects of Product Commonality Under Binormal Distribution of Demands

This paper is devoted to the study of product commonality effects, i.e. the replacement of two, or more specific components by a single one. We study the impact of commonality when specific product demands follow a binormal distribution. It is shown that commonality is more efficient when the correlation between the demands of products is close to -1 and when the gap between the demand variances is small. An original commonality index aimed to measure the performance of various product configurations is finally developed.

FOUQUE, T. and TARONDEAU, J.C. (1996). Effects of Product Commonality Under Binormal Distribution of Demands. ESSEC Business School.