Decisions on pricing, capacity investment, and introduction timing of new product generations in a durable-good monopoly

Autor(en)
Richard F. Hartl, Peter M. Kort, Andrea Seidl
Abstrakt

The aim of the present paper is to analyze how firms that sell durable goods should optimally combine continuous-time operational level planning with discrete decision making. In particular, a firm has to continuously adapt its capacity investments and sales strategy, but only at certain times it will introduce a new version of the durable good to the market. The launch of a new generation of the product attracts new customers. However, in order to be able to produce the new version, production facilities need to be adapted leading to a decrease of available production capacities. We find that the price of a given generation of a product decreases over time. A firm should increase its production capacity most upon introduction of a new product. The stock of potential consumers is largest then so that the market is most profitable. The extent to which existing capacity can still be used in the production process for the next generation has a non-monotonic effect on the time when a new version of the product is introduced as well as on the capital stock level at that time.

Organisation(en)
Institut für Business Decisions and Analytics
Externe Organisation(en)
Tilburg University, University of Antwerp
Journal
Central European Journal of Operations Research
Band
28
Seiten
497-519
Anzahl der Seiten
23
ISSN
1435-246X
DOI
https://doi.org/10.1007/s10100-019-00659-4
Publikationsdatum
11-2019
Peer-reviewed
Ja
ÖFOS 2012
502017 Logistik
Schlagwörter
ASJC Scopus Sachgebiete
Management Science and Operations Research
Link zum Portal
https://ucris.univie.ac.at/portal/de/publications/decisions-on-pricing-capacity-investment-and-introduction-timing-of-new-product-generations-in-a-durablegood-monopoly(2b3c5a76-8d17-4be9-8ef5-a205e5814e12).html