Optimal Strategies for Price and Warranty over the Product Life Cycle

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Amiri, Hamid | 2014

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Type of Document: M.Sc. Thesis
Language: Farsi
Document No: 46166 (01)
University: Sharif University of Technology
Department: Industrial Engineering
Advisor(s): Haji, Alireza
Abstract:
Price and warranty are two powerful marketing tool that can stimulate consumers’ purchase willingness. Therefore, producers must choose the appropriate price and warranty that can stimulate customers to purchase the quantity that will achieve the maximum profit. This study investigates optimal strategies for price and warranty length of a new product to maximize profit of a producer during lifecycle of the product. We consider both durable products and non-durable ones. Customers buy non-durable products many times but if we consider the planning horizon relatively short, each customer buys one product during the period. So, the market for non-durable products is static and for durable ones is dynamic. The objective function includes both demand and cost functions, where production cost and warranty cost are involved. A solution approach using the maximum principle is described and some propositions are discussed for different warranty policy in both markets
Keywords:
Marketing ; Pricing ; Dynamic Market ; Static Market ; Maximum Principle