1. Profit maximization in a multi-product firm with impatient customers
- Author
-
Levin, EJ, Ma, Y., and Wright, RE
- Subjects
Management science -- Analysis ,Profit -- Management ,Company business management ,Business ,Business, general - 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. Journal of the Operational Research Society (2004) 55, 211-218. doi: 10. 1057/palgrave.jors.2601674 Keywords: economics; manufacturing; multi-product; pricing; delivery lags; inventory
- Published
- 2004