A multi-stage optimal control approach of durable goods pricing and the launch of new product generations

• Autores: Andreas Seidl, R. F. Hartl, P. M. Kort
• Localización: Automatica: A journal of IFAC the International Federation of Automatic Control, ISSN 0005-1098, Nº. 106, 2019, págs. 207-220
• Idioma: inglés
• Texto completo no disponible (Saber más ...)
• Resumen

  • We analyze the problem of a firm that sells durable goods. In particular, we investigate how this firm optimally combines continuous-time operational-level planning (continuously deciding on capacity investment) with discrete decision making (when to launch a new generation of the product, how to price a particular generation of the product). We find that a firm should invest most into its production capacity just after the introduction of a new product. Then there is a large number of potential customers and thus a large production capacity is needed to fulfill demand. 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 optimal timing of launching a new generation as well as on its price. We show that the optimal price declines with each new product generation.