Capacity Decisions for High-Tech Products with Obsolescence
We consider capacity decisions for a high-tech producer, recognizing that product prices are declining in both time (obsolescence) and volume (market heterogeneity) factors. We model price as a multiplicative function of these two (linear) factors, and develop an analytic model that treats capacity as fixed throughout the sales horizon. Capacity investments must be recouped during the products lifecycle, recognizing that price will fall over time, and the firms sales rate is limited by the magnitude of those capacity investments. Since product prices fall as sales continue, the capacity and pricing factors are tightly coupled, and by addressing their interaction, we are able to analyze how these profit drivers effect the firms optimal capacity decision. For product with negligible marginal cost (which might apply as a useful approximation for smallscale microprocessors, or other information-intensive goods), we derive a product categorization that prescribes distinct optimal policy results for two complementary cases: rapid versus gradual obsolescing products. In addition, we validate the structure of the embedded pricing model using empirical data from the microprocessor industry. Our results provide insight on the capacity management under obsolescence.
Michael S. Pangburn Shankar Sundaresan
University of Oregon Eugene, OR 97408 Rutgers University Camden, NJ 08102
国际会议
2007 International Conference on Manufacturing & Service Operations Management(2007制造与服务运作管理国际学术会议)
北京
英文
2007-06-18（万方平台首次上网日期，不代表论文的发表时间）