Journal of Applied Mathematics

The Strategy of New Product Introduction in Durable Goods with Secondary Market: Application of the Optimization Method to Supply Chain Problem

Pei Zhao and Zhongkai Xiong

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Abstract

The aim of this paper is to address how the secondary market affects the strategy of the manufacturer’s new product introduction by using the optimization method. To do so, we develop a two-period model in which a monopolistic manufacturer sells its new durable products directly to end consumers in both periods, while an entrant operates a reverse channel selling used products in the secondary market. We assume that the manufacturer launches a higher quality product in the second period for the technological innovation. We find that the secondary market can actually increase the manufacturer’s profitability and drives the new product introduction in the second period. We also derive the effect of the durability and the degree of quality improvement on the pricing of supply chain partners.

Article information

Source
J. Appl. Math., Volume 2014 (2014), Article ID 543092, 10 pages.

Dates
First available in Project Euclid: 2 March 2015

Permanent link to this document
https://projecteuclid.org/euclid.jam/1425305606

Digital Object Identifier
doi:10.1155/2014/543092

Mathematical Reviews number (MathSciNet)
MR3182375

Zentralblatt MATH identifier
07010678

Citation

Zhao, Pei; Xiong, Zhongkai. The Strategy of New Product Introduction in Durable Goods with Secondary Market: Application of the Optimization Method to Supply Chain Problem. J. Appl. Math. 2014 (2014), Article ID 543092, 10 pages. doi:10.1155/2014/543092. https://projecteuclid.org/euclid.jam/1425305606


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