An Inventory Model for New Product When Demand Follows Dynamic Innovation Process having Dynamic Potential Market Size

K. K. Aggarwal and Alok Kumar
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K. K. Aggarwal: Department of Operational Research, University of Delhi, Delhi, India
Alok Kumar: Department of Operational Research, University of Delhi, Delhi, India

International Journal of Strategic Decision Sciences (IJSDS), 2012, vol. 3, issue 4, 78-99

Abstract: In this era of globalization and constant innovation the life cycles of the products are diminishing which tends to dynamic behaviour of the system and because of this there is a constant introduction of new products in the market. Therefore, while developing inventory models for new products, it becomes necessary to consider dynamic parameters associated with the demand function and are responsible for making the system dynamic which are essential for economic ordering policies for such products. In this paper an economic order quantity model has been developed in which the demand is time dependent and innovation driven. The parameters such as coefficient of innovation and potential market size associated with the demand function have been considered as dynamic over time to match with the real feature of the system. The model is illustrated with a numerical example and a comprehensive sensitivity analysis of the optimal solution with respect to different parameters has been performed to know the utility of the model.

Date: 2012
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