Profit maximization in a multi-product firm with impatient customers

E.J. Levin, Y. Mae, R.E. Wright

Research output: Contribution to journalArticle

2 Citations (Scopus)

Abstract

In this paper, the standard model of profit maximization is extended to include multi-product production in a market characterized by impatient customers. A formal model is presented that includes price, delivery frequency, production run length per set-up and product range as endogenous variables. The model facilitates the analysis of the complex interactions between these variables and highlights the inherent problems relating to profit maximization. For example, offering a broader range of products and/or more rapid delivery may seem to be a sensible response for a multi-product firm with impatient customers in a scenario of depressed demand. However, the analysis shows that such strategies could be counterproductive.
Original languageEnglish
Pages (from-to)211-219
Number of pages8
JournalJournal of the Operational Research Society
Volume55
Issue number3
DOIs
Publication statusPublished - 2004

Keywords

  • economics
  • manufacturing
  • multi-product
  • pricing
  • delivery lags
  • inventory

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