Optimal Product Portfolio: Finding optimal set of products, which minimizes cost. Is there a feasible algorithm on today's computers?

The question is a bit older, but nonetheless :)

A few comments: Products have acquisition and disposal costs, but also for maintenance, support, updates/modifications and obsolescence. This is also part of the function. Products consist of parts (HW and SW) that can fail in several ways. The fixing causes the costs. Costs also come from lost revenue because of non-availability. So, I suggest to reformulate as Asset management question. Costs can be calculated via tasks/services that are required to restore a function.The functions of systems/parts drive the costs. A part failure, may not result in function failure, so it is irrelevant.

For methodology, have a look at www.s3000L.org, www.s4000P.org and the downloads of www.sx000i.org. Specs are for free, updates scheduled mid this year.

Tools are from TFD in UK (Vmetric) or Systecon Toolsuite from Sweden (OPUS10, etc). The math is not very complex of you know math, focus on costs vs availability. You may find some tools in the US as well.

ISO15288 on Systems Engineering provides the engineering perspective.