Profit maximization in a multi-product firm with impatient customers
Document Type
Journal article
Source Publication
Journal of the Operational Research Society
Publication Date
1-1-2004
Volume
55
Issue
3
First Page
211
Last Page
218
Keywords
Delivery lags, Economics, Inventory, Manufacturing, Multi-product, Pricing
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.
DOI
10.1057/palgrave.jors.2601674
Print ISSN
01605682
E-ISSN
14769360
Publisher Statement
Copyright © 2004 Operational Research Society Ltd. Access to external full text or publisher's version may require subscription.
Full-text Version
Publisher’s Version
Language
English
Recommended Citation
Levin, E. J., Ma, Y., & Wright, R. E. (2004). Profit maximization in a multi-product firm with impatient customers. Journal of the Operational Research Society, 55(3), 211-218. doi: 10.1057/palgrave.jors.2601674