Pricing and capacity planning for product-line expansion and reduction

We investigate optimal pricing and capacity planning decisions for product-line settings such as introducing a new product or dropping an existing one. We consider a two-product, two-period model with stochastic demands, where price and capacity decisions are made at the outset. Investment in capacity must be traded-off against the possibility of buying at higher spot market prices due to shortage in capacity or charging a higher price to manage the demand. Prior studies argue that introducing an additional product to the product-line strains capacity, resulting in an increase in the price of an existing product. In contrast, we find that introducing a new product can also result in a drop in price of an existing product, enabling strategic pricing by firms. The necessary condition for this to occur is that the demand uncertainties for the products are of similar magnitude and negatively correlated. Similar insights are obtained for the setting where an existing product is dropped from the product-line. Hence, product-market decisions and contextual factors play a role in capacity planning, capacity cost allocation and pricing.     

Process Uncertainty: A New Dimension for New Product Development

Abstract

Companies pursuing product leadership continually push products into innovative technology areas and new unknown markets. As companies continue to strive for continuous innovation, often leapfrogging even their own technology, new product development (NPD) processes play an increasingly important role in defining the success or failure of many new innovations. In addition, increased competitive rivalry is driving companies to commercialize their new products much more quickly. To meet these pressures, new strategies are being used to supplement the conventional new product development process that consists of strategy formulation, idea generation, screening and evaluation, development, testing, and launch. The primary objective of each of these innovation strategies is to attain sustainable competitive advantage for the company and achieve higher overall performance.

Our research examined product and service innovation strategies of six projects. Half of which were considered successful and the other half failures. Using several emerging innovation strategies including process-driven, speed-to-market, quantitative, market-driven, technology-driven, and learning-driven to classify these projects, we evaluated the innovation strategies employed in an attempt to determine the overall NPD strategy effectiveness. In addition, we also attempted to identify relevant critical success factors and associated activities to construct an ideal innovation strategy model.

In the projects we studied, we found that no one best strategy leads to successful innovation. While evaluating areas of uncertainty that impact project success, we determined that a new dimension, process uncertainty, plays as important a role as market or technical uncertainty previously examined in the emerging scholarship. Furthermore, the insights that were discovered by comparing the different innovation strategies led us to formulate the technical-market-process (TMP) uncertainty mode. The TMP model serves as a predicator for identifying the appropriate innovation strategies that can be brought together to drive project success. We conclude that the combination of identifying the appropriate innovation strategies and proficiently executing these strategies is the key to successful new product development.     

社会环保意识和闭环供应链定价策略——基于纵向差异模型的研究

在纵向差异模型的基础上,从社会环保意识,新产品和再造品的零售价格角度构建了新产品和再造品的需求函数.对分散决策时零售商销售渠道下的不同回收模式之闭环供应链进行了博弈分析,得到了闭环供应链成员的最优定价策略和最终利润,以及它们和社会环保意识之间的关系.最后运用数值运算进一步验证了前面的结果.     

考虑渠道权力结构和产品双重差异的再制造闭环供应链最优定价决策

针对具有不同渠道权力结构和回收拆解产品质量差异、新产品与再制造产品价格差异的再制造闭环供应链,主要研究其成员企业最优定价决策问题。构建了包含制造/再制造商、零售商、消费者和回收拆解商的三级再制造闭环供应链决策模型;采用Stackelberg主从博弈确定不同渠道权力结构下各成员企业的最优定价策略及其利润,并重点探讨废旧产品回收率τ、产品替代系数δ两个关键参数对它们的影响;将该决策模型应用到汽车发电机再制造闭环供应链案例。研究结果表明：1） 对于3种渠道权力结构,当制造/再制造商和零售商为主导者时,其自身利润和再制造闭环供应链总利润均最大;而当回收拆解商为主导者时,其自身利润和总利润却最小;2） 随着τ和δ的提高,单位新产品与再制造产品的最优批发价、最优零售价均增加,单位废旧产品的最优回收价则降低;制造/再制造商和零售商的利润下降,回收拆解商的利润上升,导致再制造闭环供应链的总利润呈U形。研究能够为各成员企业的最优定价决策提供有效支持与参考。     

BTO制造企业订单定价、承诺等待时间和能力决策研究

探讨了面向订单生产的新的制造模式—BTO制造环境下生产能力与订单定价之间的关系,对按BTO订单生产制造企业生产两类基于时间差异的可替代产品的利润最大化问题进行了研究.假设顾客需求对等待时间和价格是敏感的,基于这种假设,利用排队论建模方法,建立了共事产能和专用产能下整合定价、等待时间和能力规划决策的模型,分析了模型参数和...     

新鲜度差异下两种可替代生鲜品的多阶段定价策略研究

研究单个零售商销售2种可替代生鲜产品时的价格决策,建立3种定价策略下的决策模型,得到2种产品的最优固定价格、最优折扣价格和最优捆绑价格售价;通过数值仿真分析影响零售商价格决策的因素及其影响大小。研究结果表明,3种策略下产品价格都与产品新鲜度临界值同方向变化;最优固定价格随销售期临近度的增大而变高;对比3种策略下零售商的利润发现,有时捆绑价格是占优策略,有时折扣价格是占优策略,参数的大小是关键因素。     

The impact of dual-market on supply chain configuration for new products

Given a firm’s supply chain network, the key objective of supply chain configuration (SCC) is to determine a subset of supply chain partners to be involved in development, sourcing, production, distribution and support of a new product at the highest level of efficiency and expected responsiveness. Current literature on SCC realises the importance of considering the demand dynamics associated with the new product diffusion (NPD). However, these studies assume one-segment market for new products, a single homogenous consumer segment. Recent research in marketing indicates that such simplification might be fatal because a diverse and significant number of product categories may experience a dual-market structure, namely early and main markets, and generate a different demand dynamics. The objectives of this study are to: (i) develop a hybrid optimisation model, capturing both SCC decisions and the demand dynamics of dual-market NPD process; (ii) based on real-world data for a host of electronic product categories, various SCC networks and NPD demand dynamics, examine the new integrated optimisation model under one- and two-segment market; and (iii) present relevant managerial implications and guidelines for supply chain and marketing managers. Our extensive comparative computational experiment with 26 categories of consumer electronic products show that on average the relative net profit may improve significantly, when the market is considered as two-segment.     

Pricing and warranty decisions in a two-period closed-loop supply chain

For a two-period closed-loop supply chain (CLSC) consisting of a manufacturer and a retailer, Stackelberg game analyses are conducted to examine pricing and warranty decisions under two warranty models depending on who offers warranty for new and remanufactured products and the corresponding benchmark models with a warranty for new products only. Next, we identify the conditions under which warranty for remanufactured products is offered and investigate how this warranty affects the CLSC operations. Subsequently, comparative studies are carried out to examine equilibrium decisions, profitability and consumer surplus of the CLSC between the two warranty models. Analytical results show that offering warranty for remanufactured products does not affect new product pricing in period 2, but influences the pricing of new products in period 1 and remanufactured products in period 2, thereby enhancing remanufacturing, individual and channel profitability, and consumer surplus. Compared to the retailer warranty for remanufactured products, the manufacturer warranty can attain a more equitable profit distribution. If the warranty cost advantage of the manufacturer (retailer) is significant relative to that of the retailer (the manufacturer), the manufacturer (retailer) arises as a natural choice to offer warranty for remanufactured products as this decision enhances both profitability and consumer surplus.     

Pricing and remanufacturing decisions in two competing supply chains

This paper considers the pricing and remanufacturing decisions in a duopoly market with two competing supply chains, which compete at both manufacturer and retailer levels. There are one manufacturer and one retailer in each supply chain, one manufacturer produces the new product directly from raw material, while the other manufacturer has incorporated a remanufacturing process for used product into the original production system. Based on different industry organisation structures and the chain members’ competing forms, five game decision models are established to explore the chain members’ optimal strategies on price and/or remanufacturing, and the corresponding equilibrium solutions are obtained. Finally, we carry out the sensitivity analysis through numerical studies of some key parameters for examining their influences on the pricing decisions and chain members’ maximum profits. On the basis of comparison and analysis, some managerial insights are derived.     

网络零售商产品与运费联合定价的优化决策研究

消费者网络购物对运费的认知和商家的偏好存在差异。通过消费者的购买行为分析和效用函数的刻画,研究网络零售商在进行产品与运费联合定价时捆绑定价和分割定价的优化决策问题。讨论商家之间价格竞争的组合形式,提出最优定价存在的情形选项,论证价格决策的边界和适用条件,揭示商家之间采用捆绑定价的对称竞争均衡具有稳定性,及其不同均衡条件下商家利润的相对大小规律。研究结论表明,价格决策的选项取决于商家的产品成本高低,在产品成本给定的条件下,每种价格决策的边界依赖于市场中消费者的属性特征,即运费存怀疑的消费者比例,以及消费者对商家的偏好程度。     

Dynamic product acquisition in closed loop supply chains

We consider a closed-loop supply chain where demand can either be satisfied by manufacturing new products or by buying back used products from customers and upgrading their functionality by remanufacturing. A joint buy-back pricing and manufacturing–remanufacturing decision model at the operations–marketing interface is presented that allows for dynamic parameters, e.g. product life cycles and seasonal aspects. The model allows the identification of beneficial opportunities for buying back and storing used products for immediate and future recovery. We present a new deterministic, dynamic, continuous-time optimisation model, derive necessary and sufficient optimality conditions, and develop a solution algorithm to find the cost-minimising manufacturing and remanufacturing policies as well as buy-back strategies for used products based on Pontryagin's Maximum Principle. It is shown that, in general, an optimal policy will include time intervals where returns are acquired so as to synchronise demand and remanufacturing, where returns are acquired and stored for future remanufacturing, and intervals where demand is satisfied by a mix of manufactured and remanufactured products. Furthermore, we discuss several reactive and proactive acquisition and remanufacturing heuristics and show under which conditions they are optimal. The findings are illustrated by numerical examples.     

Optimal core acquisition and pricing strategies for hybrid manufacturing and remanufacturing systems

In this study, we combine two aspects of remanufacturing, namely product acquisition management and marketing (pricing) of the remanufactured products. We consider an original equipment manufacturer (OEM) who decides on the acquisition prices offered for returns from different quality types and on selling prices of new and remanufactured products, in a single period setting. We develop a procedure for determining the optimal prices and corresponding profit of the OEM, and conduct a sensitivity analysis to understand the effect of different model parameters on the optimal strategies and profit. An important managerial insight is that the optimal solution is not to have the same profit per remanufactured item for all return types, but to if the minimum cost for acquisition and remanufacturing of some core type is lower.     

Marketing/Manufacturing Trade-Offs in Product Line Management

A critical decision facing firms across industries is the selection of a mix of products to offer in the marketplace. Both in practice and in the academic literature, the product line design problem has typically been considered from a marketing perspective, with a focus on how alternative sets of products interact and compete in the marketplace. The operational implications of product line decisions have been largely ignored, even while the importance and complexity of interactions among products in the manufacturing environment increase with broadening product lines. Furthermore, consideration of manufacturing synergies among products in product line design is increasingly beneficial given efforts in many industries to improve co-ordination of manufacturing activities across products. In this work we examine the benefits of integrating marketing implications of product mix with more detailed manufacturing cost implications. Traditional product line models are extended to capture both individual product costs and relevant cost interactions among products. The relevant marketing and manufacturing elements are considered in a mathematical programming formulation that identifies a profit maximizing mix of products. The resulting normative model of the product line design problem is used to generate insights into important cross-functional issues in product line management. Specifically, we examine the impact of alternative manufacturing environment characteristics on the composition of the optimal product line.     

The role of relationship promoter in new product development collaboration

Since new product development (NPD) collaborations with external partners have become the next generation in NPD practices, relationship promoters have become especially relevant as key contributors to the success of this type of inter-organisational collaboration. To realise successful outcomes in NPD collaborations, partners face the challenge of effectively integrating the role of relationship promoter into their existing and essential relationships of trust. It is within this context that this paper examines the role of the relationship promoter, by analysing its moderating effect on the relationship between trust and the outcomes of NPD collaboration – including new product competitiveness and partner satisfaction. We test our hypotheses against survey data from 107 innovative firms involved in NPD collaboration with the help of relationship promoters. The results show that, while a non-significant influence can be reported about the presence of a relationship promoter in terms of partner satisfaction, the relationship promotor weakens the influence of trust on new product competitiveness, making trust less important when it comes to creating a competitive new product.     

Integrated decision-making in reverse logistics: an optimisation of interacting acquisition,grading and disposition processes

In view of global environmental and social challenges the transition towards a Circular Economy is considered as a crucial factor for sustainable development. Therefore, the replacement of traditional linear business models involving product discard at the end of product life with concepts focusing on re-use of resources is essential. Reverse Logistics and Closed-loop Supply Chains are seen to be key elements of such a transition. Motivated by findings from a case study of an independent reprocessing company, we address integrated decision-making in Reverse Logistics in this paper. We present a non-linear optimisation model with interrelated processes in terms of acquisition of used products, grading for determination of product quality and reprocessing disposition. The decisions to be made concern the effort spent for active acquisition of used products and the number of reprocessed goods; both decisions are influenced by heterogeneous condition of used products. The consideration of deterministic and stochastic demand facilitates the representation of a variety of business cases. For both demand types we provide analytical insights in the form of complete strategies consisting of different scenarios which allow optimal decision-making under variable conditions. Numerical examples complement insights into the model by conducting a sensitivity analysis of relevant model parameters.     

基于五维价值感知的文博文创产品消费需求洞察

目的 通过五维价值感知模型,洞察新生代群体文博文创消费需求的影响因素,从而为构建产品策略与设计方法奠定基础。方法 以文化消费与价值感知理论为基础,以情感、文化、社会、功能与价格价值感知为变量,对文博文创消费需求影响因素及其关系提出研究假设;通过问卷调研获取相关数据,应用SPSS分析工具进行数据分析,并进行假设检验。结果 得出情感价值感知是新生代群体文博文创消费需求的首要影响因素;文化价值感知是影响消费需求的关键因素;社会价值感知对文博文创消费需求具有重要影响;功能价值感知是必备而非显著性影响因素;价格价值感知基于新生代细分群体差异较大,对消费决策呈不同影响。结论 关注独特、共鸣、颜值与趣味交织的情感体验,满足基于文化认知、文化认同动机的文化探寻诉求,塑造自我价值与社交货币相互催化的社会价值感知,期待实现技术赋能下的“新文创”产品功能价值,构建满足价格预期与心理账户的文博文创产品层级体系,将对文博文创消费意愿提升具有显著影响。     

Sensing,smart and sustainable product development (S3 product) reference framework

Enterprises must become ‘sensing, smart and sustainable (S³)’ to face global challenges related to local, national and global market dynamics. Therefore, reconceptualisation and redesign in these enterprises must accommodate emergent technologies, new practices and strategies. In this sense, enterprises have used new product development as a strategy for remaining competitive in the marketplace; thus, they can provide a new generation of products offering solutions to contemporary social problems and responding to changing consumer demands. These new-generation products are mostly technology-based and consider sustainable objectives. In this context, concepts such as sensing, smart and sustainable products (S³ products) have emerged to satisfy different social requirements. Therefore, this work focuses on providing a reference framework that presents a systematic process for the development of S³ products. This reference framework is based on the integrated product, process and manufacturing system development reference model. The main objective of this work is to fill the gap vis-à-vis the current lack of design roadmaps that permit the development of this new generation of products in S³ enterprises. The development of a reconfigurable micro-machine tool is presented as that of an S³ product.     

Modeling the design quality competition for durable products

In this paper we model the design quality competition in durable product markets. We use a duopolistic non-cooperative game theoretic framework. Each firm controls the design quality level and the price of its product. The resulting control theoretic model is solved under certain functional assumptions to describe the Nash equilibrium design quality and pricing strategies of the two competitors. We compare open and closed loop design quality and pricing strategies. We use an extensive set of numerical experiments to investigate the effects of various parameters of the model on the optimal policies. We conclude with a brief summary of our results and some useful managerial insights derived from the model.     

模仿创新企业进入时机和动态定价联合决策问题研究

以系统动力学建模为研究方法,通过仿真研究模拟创新企业进入市场后的市场需求变化和收益情况,特别分析了当企业的决策目标分别为产品销量最大或产品收益最大两种情景下的运营策略。模型探讨了包括消费者犹豫行为和消费者对产品打折销售的心理预期两种不同消费者行为偏好对企业运营策略的影响。结果表明：模仿创新企业以追求产品销售最大化为目标时,其最优的运营策略为尽早打折和较大的价格折扣;而当模仿创新企业追求收益最大化时,其最优的运营策略是不打折。当消费者存在产品打折的心理预期时,企业通过推后打折时间,既满足消费者的心理预期,还能获得更多的产品收益。     

Satisfying customer preferences via mass customization and mass production

Two operational formats namely mass customization and mass production can be implemented to satisfy customer preference-based demand. The mass customization system consists of two stages: the initial build-to-stock phase and the final customize-to-order phase. The mass production system has a single stage: building products with pre-determined specifications to stock. In each case, the company makes decisions on the number of initial product variants, product specifications, production quantities and product pricing. Under a uniform customer preference distribution, the optimal number of base-product variants resembles the well known economic order quantity solution, and the optimal product specifications are equally spaced. We characterize three possible benefits of mass customization: (i) the gained surplus from offering each customer her ideal product; (ii) extra revenue from price discrimination; and (iii) reduced costs due to risk pooling under stochastic demand.