Demand-supply interaction and inventory buildup strategies for short life cycle products

Rong Pan, Adriano O. Solis, Bixler Paul

Research output: Chapter in Book/Report/Conference proceedingConference contribution

Abstract

Revenues and profits from short life-cycle products will depend upon careful formulation and execution of production plans in response to demands in the marketplace. This research contributes to the development of the production and inventory buildup strategies for short life-cycle products under different demand-supply scenarios. A modified Bass diffusion model is used to characterize the product demand pattern with consideration of demand-sales interaction. We develop cost models based on production costs, inventory carrying costs, backlog costs, and cost of lost sales for a number of different production scenarios. The optimal production rate can be obtained by minimizing the total cost. We also investigate the benefit of an initial buildup of inventory before the product's sales period starts.

Original languageEnglish (US)
Title of host publication10th International Conference on Modeling and Applied Simulation, MAS 2011, Held at the International Mediterranean and Latin American Modeling Multiconference, I3M 2011
PublisherCaltek s.r.l.
Pages314-321
Number of pages8
StatePublished - 2011
Event10th International Conference on Modeling and Applied Simulation, MAS 2011, Held at the International Mediterranean and Latin American Modeling Multiconference, I3M 2011 - Rome, Italy
Duration: Sep 12 2011Sep 14 2011

Other

Other10th International Conference on Modeling and Applied Simulation, MAS 2011, Held at the International Mediterranean and Latin American Modeling Multiconference, I3M 2011
CountryItaly
CityRome
Period9/12/119/14/11

ASJC Scopus subject areas

  • Modeling and Simulation

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    Pan, R., Solis, A. O., & Paul, B. (2011). Demand-supply interaction and inventory buildup strategies for short life cycle products. In 10th International Conference on Modeling and Applied Simulation, MAS 2011, Held at the International Mediterranean and Latin American Modeling Multiconference, I3M 2011 (pp. 314-321). Caltek s.r.l..