Recently the buying power of customers has increased as a result of globalisation forcing anufacturers including shipbuilders to produce products with wider variety at lower delivery times. This research aims to optimise the traditional production strategy applied at Damen shipyards for the production of standard tugs. Three levels of standardisation have been investigated to reduce variety and increase commonality based on the platform-based product development strategy to reduce lead times and production cost. Level 1 main assembly, including the product portfolio configuration and main assembly activities such as; the production of standard sections on stock. Level 2 sub-assembly, which includes shifting outfitting activities from being performed on board to the workshop where standard and modular outfitting units are produced which fit different systems and components and are interchangeable between different ship types. Level 3 components, standardising within and between ship types to achieve a purchase advantage, increase in-house knowledge and improve service and quality. The effect of changing the production strategy to assemble-to-order instead of make-to-stock has also been investigated. A significant stock value reduction of 56% is achieved by changing to the latter production strategy. With the implementation of the three standardisation levels production time, cost and required manhours can be reduced by 36%, 11% and 24%.’