Supply Chain Configuration for Diffusion of New Products: An Integrated Optimization Approach

Haitao Li, Mehdi Amini

Research output: Contribution to journalArticlepeer-review

Abstract

We develop an integrated/hybrid optimization model for configuring new products’ supply chains while explicitly considering the impact of demand dynamics during new products’ diffusion. The hybrid model simultaneously determines optimal production/sales plan and supply chain configuration. The production and sales plan provides decisions on the optimal timing to launch a new product, as well as the production and sales quantity in each planning period. The supply chain configuration provides optimal selection of options and safety stock level kept at each supply chain function. Extensive computational experiments on randomly generated testbed problems indicate that the hybrid modeling and solution approach significantly outperforms non-hybrid alternative modeling and solution approaches under various diffusion and supply chain topologies. We provide insights on optimal production/sales plan and supply chain configuration for new products during their diffusion process. Also, managerial implications relevant to effectiveness of the hybrid approach are discussed.
Original languageAmerican English
JournalOmega
Volume39
DOIs
StatePublished - 2011

Keywords

  • Marketing
  • Mathematical programming
  • Operations management
  • Product life cycle
  • Production planning and control

Disciplines

  • Business Administration, Management, and Operations

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