Customer Preferences, Supply-Chain Costs, and Product-Line Design
The modeling framework developed here to address the positioning and pricing of a product line assumes that products differ in price and in a single physical attribute. It incorporates a flexible representation of customer heterogeneity, allowing for price-sensitive demand, and a rich class of supply-chain cost models. A key characteristic of potentially optimal product lines, termed the cross-point property, is used to develop efficient dynamic programming algorithms to determine an optimal product line.
KeywordsProduct Line Maximum Profit Reservation Price Setup Cost Total Demand
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