New Product Launching with Pricing, Free Replacement, Rework, and Warranty Policies via Genetic Algorithmic Approach

Abstract

New products are appearing in the marketplace at an ever-increasing step. Their launching is either market driven, or technology driven. Pricing and warranty policies play a vital role in launching of a new product, consequently growth of a company. In this paper a decision model is proposed to determine the pricing and warranty polices of a newly launched product considering free replacement during warranty period, and reworking during production process. We have assumed that the reworking is performed for the defective items, which are produced when a machine shifts from in-control state to out-of-control state to make them perfect. Profit function is formulated by combining the diffusion models and cost model. Structured optimal policies are proposed using optimal control theory and genetic algorithm solution approach is employed to explore the optimum values of price and warranty for every period of the product's life cycle. Numerical example is presented considering different values of model parameters. Further, sensitivity analysis is performed to study the impact of model parameters on the profit model. The results of the paper will be greatly useful for the decision-makers, as it allows them to identify the role of the selected parameters during the entire life cycle of the product, and to study the long-term policy of a newly launched product.

Dynamic testing resource allocation modeling for multi-release software using optimal control theory and genetic algorithm

“…There are many optimization methods for finding a suitable optimal solution to such problems, but GA aids to look for the best solution among a number of possible solutions. GA is one of the best problem-solving approaches among other metaheuristics when large-scale problems are considered (Soleimani et al, 2013;Kumar et al, 2014Kumar et al, , 2017Kumar et al, , 2019. Researchers (Pasandideh et al, 2011;Yang et al, 2012) applied GA to inventory management-related problems successfully.…”

Optimal Promotional Effort Policy in Innovation Diffusion Model Incorporating Dynamic Market Size in Segment Specific Market

“…In order to obtain the dynamic promotional effort policies, we use Pontryagin's Maximum Principle (Seierstad and Sydsaeter, 1987;Kumar et al, 2014;Kumar and Sahni, 2016;Kumar et al, 2017;Kumar et al, 2019) to solve the optimal control problem expressed in Eq. (6).…”

“…Huang et al (2012) and Helmes et al (2013) formulate and analyse optimal control models in order to decide various policies for advertising and pricing of products. Recently, Kumar et al (2019) developed a model for optimal price and warranty policies of a newly launch product using optimal control theory and genetic algorithm solution approach is employed to explore the optimum values of price and warranty for every period of the product's life cycle. Mesak et al (2020) proposed a model for qualitative characterization of optimal pricing and advertising policies together with the optimal ratio of the advertising elasticity of demand to its price elasticity over time.…”

Optimal control policy to production and inventory system with promotion effort dependent demand in segmented market

“…The products that are stocked are assumed to deteriorate at a constant rate. A decision model given by Kumar et al [26] discuss the pricing and warranty policies for a new product incorporating free replacement during warranty period and re-working throughout production process. An optimal solution of the production-Inventory set-up has been discussed by Giri and Sharma [4].…”