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Title: New product development considering product cannibalization, development cost and production cost
Authors: Yang, B 
Hu, XL 
Keywords: Decision making
New product selection
Product planning
Process variation cost
Issue Date: 2016
Publisher: The Operations Research Society of Japan
Source: Journal of the Operations Research Society of Japan, 2016, v. 59, no. 1, p. 130-145 How to cite?
Journal: Journal of the Operations Research Society of Japan 
Abstract: This paper explores a situation in which a firm wants to add a new product to its existing product line in order to maximize its profit. A new product contains a group of attributes, and thus its development can be viewed as a configuration of attribute levels. Different attribute levels contribute to product variety and reduce cannibalization by product similarities. On the other hand, large variations in attribute levels often increase development cost and process variation cost. Thus, the impact of product cannibalization, development cost and production cost on new products should be evaluated. We formulate this selection of attribute levels as a nonlinear optimization problem. A heuristic is proposed to solve the problem efficiently, and managerial implications are provided.
ISSN: 2188-8299
DOI: 10.15807/jorsj.59.130
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