Abstract
To maintain a competitive edge, technology manufacturers must produce systems that are reliable enough to satisfy customers yet cheap enough to engineer so that they are profitable. This paper presents an optimization model to maximize the statistical confidence in product profitability, permitting flexibility in the design and number of the units manufactured. This is unlike traditional approaches, which optimize the reliability of a single unit or the average profit. Thus, the proposed approach places greater emphasis on risks specific to the production of small lots. The approach also removes the widespread assumption that components fail in a statistically independent manner The utility of the approach is demonstrated through a series of examples. The results indicate the approach mitigates the risk that a larger than average number of failures compromises profitability.