Modeling process-switching decisions under product life cycle uncertainty

Document Type

Article

Publication Title

International Journal of Production Economics

Abstract

We address the process-switching decision of a firm that adopts a mixed process strategy with respect to a new product in the context of product life cycle uncertainty. A mixed process strategy uses a flexible process in the early stages of the product's life cycle and later switches to a dedicated process to gain cost economies. We present a model that captures uncertainty through alternative life-cycle demand functions to guide the process-switching decision. We develop a dynamic decision rule that can be used with any uncertainty-resolution scheme and demonstrate its application and robustness using an illustrative numerical example.

Publication Date

1-4-2010

Publisher

Elsevier

Volume

Vol.126

Issue

Iss.2

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