Analysis of Production Capacity and Sampling of Primary and Contingent Products
This paper establishes a model group of diffusion process of primary and contingent products, and explores the impact of free samples on diffusion process considering repeat purchase, multiple-unit purchase and various pricing strategies under supply restrictions. The paper shows that a proper production capacity to meet the market can be determined by balancing the production capacity and cost. When the production capacity is big enough, there is no need to set up the preparatory period to produce products. When the production capacity is too small to meet the demand, there is no need to sampling; only when the production capacity reaches a certain extent, the sampling level keeps in a stable level.
KeywordsPrimary product Contingent product Product sampling Production capacity Price strategy
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This research is supported by National Natural Science Foundation of China (Grant No. 70971091).
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