A joint analysis of production and seeding strategies for new products: an agent-based simulation approach

Ashkan Negahban () and Jeffrey S. Smith ()
Additional contact information
Ashkan Negahban: The Pennsylvania State University
Jeffrey S. Smith: Auburn University

Annals of Operations Research, 2018, vol. 268, issue 1, No 4, 62 pages

Abstract: Abstract The goal of this paper is to provide a joint analysis of marketing and production strategies for new products to find the optimal combination of seeding and inventory build-up policies. We propose and experiment with an agent-based simulation model of new technology diffusion to evaluate different seeding criteria, fraction of the market to seed, and inventory build-up policies under various social network structures, demand backlogging levels, and product categories. In contrast to previous findings (that are mainly based on the assumption of unlimited supply), we show that the seeding strategy that maximizes the adoption rate is not necessarily optimal in the presence of supply constraints. More importantly, we show that determining seeding and build-up policies sequentially may lead to suboptimal decisions and that the optimal combination of seeding and build-up policy varies for different product categories. We study different small-world and scale-free networks and illustrate how the distribution of long-range connections and influential nodes affect the adoption, demand backlogging, and lost sales dynamics as well as the overall profit. The important implications of the findings for diffusion research as well as marketing and operations management practice are also discussed.

Keywords: Innovation diffusion; Seeding; Myopic and build-up policies; Social network; Agent-based modeling and simulation (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://link.springer.com/10.1007/s10479-016-2389-8 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:annopr:v:268:y:2018:i:1:d:10.1007_s10479-016-2389-8

Ordering information: This journal article can be ordered from
http://www.springer.com/journal/10479

DOI: 10.1007/s10479-016-2389-8

Access Statistics for this article

Annals of Operations Research is currently edited by Endre Boros

More articles in Annals of Operations Research from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().