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Up or Out—or Stay Put? Product Positioning in an Evolving Technology Environment
Author(s) -
Jain Sanjay,
Ramdas Kamalini
Publication year - 2005
Publication title -
production and operations management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 3.279
H-Index - 110
eISSN - 1937-5956
pISSN - 1059-1478
DOI - 10.1111/j.1937-5956.2005.tb00030.x
Subject(s) - flexibility (engineering) , computer science , product (mathematics) , new product development , product lifecycle , core (optical fiber) , stochastic programming , product design , technology development , manufacturing engineering , operations management , operations research , industrial engineering , risk analysis (engineering) , mathematical optimization , business , marketing , engineering , economics , telecommunications , mathematics , geometry , management
When the development cycle for a product is longer than the development cycle for a core technology that is embedded in it, designers may need to modify the product̂s design to avail of upgrades in this core technology. We model optimal product positioning with regard to technology choice in this setting, using a stochastic dynamic programming framework. Under fairly general assumptions, we find that there are three possible optimal actions: to abandon the project, to maintain the current technology, or to reposition so as to use the best technology currently available. We characterize the optimal positioning sequence in different design environments, discussing throughout the practical implications of our model. Previous research and conventional wisdom suggest early finalization of product specifications if design flexibility is decreasing over time. In contrast, we find that in some design environments, repositioning late in the development cycle can be optimal.