An Optimal Exiting Time for Old Generation Product in Supply Chain

Abstract

(I) Brief problem description: With technology developing, many series products which have several generations appear in one market. The sales of new and old generations of a product in one market influences each other. (II) The study aim: In order to help the supply chain to obtain more benefits, this paper makes a study on the exiting of old generation products. (III) Method: Based on Fisher model and multi-generation product diffusion model, this paper establishes an optimal decision-making model for the exiting time of old generation product, and analyzes the relationship between the optimal exiting time of the old generation product and the technical level of the new generation product. (IV) Result and conclusion: Observations from this study include (1) when the profit of the new generation product sold only and that of the two generations sold simultaneously are the same, it is the optimal time for old generation product to exit market, and (2) the higher the technical level of new generation product is, the earlier old generation product will exit from market, and the more profit supply chain will get. (V) Significance: The research result will help some company make optimal decision-making for the exiting time of old generation product, and get more profit.