| Product variety management has emerged as a critical dimension of successful business practice. In this dissertation, we present three working papers investigating variety related issues such as design, timing, and pricing of a product line. In Chapter One we introduce a theoretical new product development model where a firm needs to determine the timely replacement of products and an effective control of the upgrading process. We present a collection of analytic models of the problem of deciding the new product design quality at the component level, and timing the market phase-in of the new product. We also examine conditions when it is optimal to redesign a component, versus reusing the old component in the new product. An in-depth analysis of our results and their managerial implications are also presented in this chapter.;In Chapter Two, we consider a general product line design and pricing model under different supply chain structures. Specifically, we formulate analytic models to explore the intricate relationships of product variety, design and pricing decisions in a centralized and decentralized supply chain for durable products with deterministic consumer demand. We also investigate the manufacturing and marketing coordination issues in determining the optimal product variety in a decentralized supply chain, in which case the retailer does not necessarily carry all products offered by the manufacturer. Our finding shows realizing variety coordination is the only way to maximize supply chain systematic profit when multiple products are involved.;We study the product line design and pricing problem in a centralized supply chain facing stochastic market demand in Chapter Three. We assume a randomized customer arrival process and a one way downward demand substitution pattern. Our analysis shows that the customer randomized arrival sequence does not affect the product line's leftover inventory and the overall demand shortage. By assuming one specific customer arrival sequence, we formulate our stochastic product line design model which appears to be difficult to solve. Further, we prove this model is equivalent to a two-stage nonlinear stochastic programming problem which can be handled by using Benders decomposition methods. |
