Optimal sales and production rollover strategies under capacity constraints

Firms regularly replace their old product generation by a newer to sustain and increase market share profit. The rollover problem of deciding on the number products be pre-produced before introduction new generation, then prices, sales volumes, production volumes during under capacity constraint is considered. Production limitations are common period product. We provide first study that examines how affects optimal decisions. decisions for deterministic period-based model provided in closed-form. A single sales/production strategy implies discontinued introducing generation. With dual strategy, sold/produced simultaneously. Depending shortage, there two types mitigation actions: (i) increasing (ii) changing and/or strategies with pre-production while adjusting prices accordingly. If unlimited, aligned always optimal. establish conditions which limited leads combination strategy. show selection non-monotone available capacity. This change response limiting has revoked more severe shortages.