Marketing wants product variety, clearly a need to survive in competitive environment. Manufacturing wants stable production schedule to gain on economies of scale and stability in production factors. The revenue interactions by offering wide variety of products is an extensively researched topic in the literature especially marketing literature. On manufacturing side offering variety is researched through modularity and commonality in product design. A new stream of research has come up in which researchers combined the issues from manufacturing and marketing in offering wide variety of products. Product variety can be offered through new products or creating variations and options in existing products. Later is typically referred as product line extension. Line extension strategy is followed by many firms including consume durables and non-durables, industrial products manufacturing firms, and services firms. From review of studies there exists no research, which attempted to evaluate product line extensions from manufacturing planning perspective. To do this one needs to inculcate demand dynamics caused by launching of product line extensions.

This study is an attempt to build a model for a firm that produces and offers multiple products. Each of these products belongs to a product line and /or manufacturing class. Now the firm is contemplating on offering more variety through product line extensions. Each of these line extensions belongs to a manufacturing class. A product line extension builds its demand from cannibalization, capturing unsatisfied demand, and capturing competitors' demand. Evaluation of trade-offs involved in selection of which line extensions to offer depends on demand dynamics caused by launching of product line extension. On the supply side this demand dynamics results into variations in mix and volume. Question for the firm is which line extensions to select and how to plan them.