what is the best approach to update the package if we have frequent update on this common code?

since this package has an indirect affect on the model endpoint, I would package with the preprocess code of the endpoint.
Each server is updating it's own local copy, and it will make sure it can take it and deploy it hand over hand without breaking its ability to serve these endpoints.
the "wastefulness" of holding multiple copies is negligible when comparing to a situation where everyone is sharing the same exact copy, and upgrading results in everyone freezing their ability to serve