View Item 

Show simple item record

An Examination of the Effect of Continuous Quality Improvements on Optimal Pricing for Durable Goods
dc.contributor.authorNarasimhan, Ramen_US
dc.contributor.authorMendez, Daviden_US
dc.contributor.authorGhosh, Soumenen_US
dc.date.accessioned2010-06-01T18:40:58Z
dc.date.available2010-06-01T18:40:58Z
dc.date.issued1996-09en_US
dc.identifier.citationNarasimhan, Ram; Mendez, David; Ghosh, Soumen (1996). "An Examination of the Effect of Continuous Quality Improvements on Optimal Pricing for Durable Goods ." Decision Sciences 27(3): 389-413. <http://hdl.handle.net/2027.42/71882>en_US
dc.identifier.issn0011-7315en_US
dc.identifier.issn1540-5915en_US
dc.identifier.urihttps://hdl.handle.net/2027.42/71882
dc.description.abstractThis paper investigates the nature of optimal prices for a durable good in the presence of continuous quality improvements. The analysis of optimal prices is based on a nonlinear dynamic model of sales response that relates price, quality, average life of a product and the persistence of quality perceptions. Numerical solutions to the model are derived by employing the generalized reduced gradient algorithm. The results show that optimal price depends on the persistence of quality perceptions and the average life of a product (an aspect of quality). The analysis of optimal results affirms results based on other models and provides insights on the influence that quality has on optimal pricing. The implications of the results and suggestions for future research are discussed.en_US
dc.format.extent1331219 bytes
dc.format.extent3109 bytes
dc.format.mimetypeapplication/pdf
dc.format.mimetypetext/plain
dc.publisherBlackwell Publishing Ltden_US
dc.rights1996 Decision Sciences Instituteen_US
dc.subject.otherDynamic Optimizationen_US
dc.subject.otherPriceen_US
dc.subject.otherQualityen_US
dc.subject.otherSales Responseen_US
dc.titleAn Examination of the Effect of Continuous Quality Improvements on Optimal Pricing for Durable Goodsen_US
dc.typeArticleen_US
dc.subject.hlbsecondlevelComputer Scienceen_US
dc.subject.hlbsecondlevelMathematicsen_US
dc.subject.hlbtoplevelScienceen_US
dc.description.peerreviewedPeer Revieweden_US
dc.contributor.affiliationumDepartment of Management, The Eli Broad Graduate School of Business, Michigan State University, East Lansing, MI 48824-1122, e-mail: narasimh@pilot.msu.eduen_US
dc.contributor.affiliationumDepartment of Health Management and Policy, School of Public Health, The University of Michigan, Ann Arbor, MI 48109, e-mail: dmendez@umich.eduen_US
dc.contributor.affiliationotherGeorgia Institute of Technology, School of Management, Atlanta, GA 30332-0520, e-mail: soumen.ghosh@mgt.gatech.eduen_US
dc.description.bitstreamurlhttp://deepblue.lib.umich.edu/bitstream/2027.42/71882/1/j.1540-5915.1996.tb00858.x.pdf
dc.identifier.doi10.1111/j.1540-5915.1996.tb00858.xen_US
dc.identifier.sourceDecision Sciencesen_US
dc.identifier.citedreferenceAbadie, J. Applications of the GRG algorithm to optimal control problems. In J. Abadie ( Ed. ), Nonlinear and integer programming. Amsterdam: North-Holland, 1972: 37 47.en_US
dc.identifier.citedreferenceBanker, R.D., & Khosla, I.S. Quality and competition. Working paper, Department of Operations and Management Science, Carlson School of Management, University of Minnesota, Minneapolis, Minnesota, 1992.en_US
dc.identifier.citedreferenceBass, F.M. A new product growth model for consumer durables. Management Science, 1969, 15, 215 227.en_US
dc.identifier.citedreferenceBagwell, K., & Riordon, M.H. High and declining prices signal quality. The American Economic Review, 1991, 81 ( 1 ), 224 239.en_US
dc.identifier.citedreferenceBesanko, D., & Winston, W.L. Optimal pricing of a product with periodic enhancements. European Journal of Operational Research, 1991, 55 ( 2 ), 268 278.en_US
dc.identifier.citedreferenceBuzzell, R.D., & Gale, B.T. The PIMS principles Linking strategy to performance. New York: The Free Press, 1987.en_US
dc.identifier.citedreferenceCook, T. Pricing for maximum profit. Telephone engineer & management, 1992, 96 ( 10 ), 50 53.en_US
dc.identifier.citedreferenceDockner, E., & Jorgensen, S. Optimal advertising policies for diffusion models of new product innovation in monopolistic situations. Management Science, 1988, 34, 119 130.en_US
dc.identifier.citedreferenceDodds, W.B., Monroe, K.B., & Grewal, D. Effects of price, brand, and store information on buyer's product evaluations. Journal of Marketing Research, 1991, 28, 307 319.en_US
dc.identifier.citedreferenceDolan, R.J., & Jeuland, A.P. Experience curves and dynamic demand models: Implications for optimal pricing strategies. Journal of Marketing, 1981, 45, 52 73.en_US
dc.identifier.citedreferenceForrester, J.W. Principles of systems. Cambridge, MA: Wright-Allen Press, 1968.en_US
dc.identifier.citedreferenceGarvin, D.A. Managing quality. New York: The Free Press, 1988.en_US
dc.identifier.citedreferenceGerstner, E. Do higher prices signal higher quality Journal of Marketing Research, 1985, 22, 209 215.en_US
dc.identifier.citedreferenceHayes, R., & Wheelwright, S. Restoring our competitive edge: Competing through manufacturing. New York: John Wiley, 1984.en_US
dc.identifier.citedreferenceHill, T. Manufacturing strategy: Text and cases. Boston, MA: Irwin, 1989.en_US
dc.identifier.citedreferenceKalish, S. Monopolist pricing with dynamic demand and production cost. Marketing Science, 1983, 2, 135 160.en_US
dc.identifier.citedreferenceKalish, S. A new product adoption model with price, advertising, and uncertainty. Management Science, 1985, 31, 1569 1585.en_US
dc.identifier.citedreferenceKirk, D.E. Optimal control theory: An introduction. Englewood Cliffs, NJ: Prentice-Hall, 1970.en_US
dc.identifier.citedreferenceKohli, R., & Mahajan, V. A reservation-price model for optimal pricing of multiattribute products in conjoint analysis. Journal of Marketing Research, 1991, 28 ( 3 ), 347 354.en_US
dc.identifier.citedreferenceLasdon, L.S., Waren, A.D., Jain, A., & Ratner, M. Design and testing of a generalized reduced gradient code for nonlinear programming. ACM Transactions on Mathematical Software, 1978, 4 ( 1 ), 34 50.en_US
dc.identifier.citedreferenceLee, H.L., & Tapiero, C.S. Quality control and the sales process. Naval Research Logistics Quarterly, 1986, 33, 569 587.en_US
dc.identifier.citedreferenceMahajan, V., Muller, E., & Bass, F.M. New product diffusion models in marketing: A review and directions for research. Journal of Marketing, 1990, 54, 1 26.en_US
dc.identifier.citedreferenceManetsch, T.J., & Park, G.L. Systems analysis and simulation with applications to economic and social systems. East Lansing, MI: Department of Electrical Engineering and System Science, Michigan State University, 1982.en_US
dc.identifier.citedreferenceMcClure, J.E., & Spector, L.C. Joint product signals of quality. Atlantic Economic Journal, 1991, 19, 38 41.en_US
dc.identifier.citedreferenceMesak, H.I. Impact of anticipated competitive entry and cost experience on optimal strategic pricing of technological innovations. Computers and Operations Research, 1990, 17 ( 1 ), 27 37.en_US
dc.identifier.citedreferenceMonroe, K.B., & Dodds, W.B. A research program for establishing the validity of the price-quality relationship. Journal of the Academy of Marketing Science, 1988, 16, 151 168.en_US
dc.identifier.citedreferenceNarasimhan, R., & Ghosh, S. A dynamic model of manufacturing quality's effect on optimal advertising and pricing policies. European Journal of Operational Research, 1994, 72, 485 502.en_US
dc.identifier.citedreferenceNarasimhan, R., Ghosh, S., & Mendez, D. A dynamic model of product quality and pricing decisions on sales response. Decision Sciences, 1993, 24 ( 5 ), 893 908.en_US
dc.identifier.citedreferenceNarasimhan, R., & Mendez, D. An investigation of the effect of product durability on monopolistic pricing. Proceedings of the 1992 Midwest Decision Sciences Institute Conference, 1992.en_US
dc.identifier.citedreferencePindyck, R., & Rubinfeld, D. Microeconomics. Englewood Cliffs, NJ: Prentice Hall, 1995.en_US
dc.identifier.citedreferencePlunkett, J.J., & Dale, B.G. Quality costs: A critique of some economic cost of quality models. International Journal of Production Research, 1988, 26 ( 11 ), 1713 1726.en_US
dc.identifier.citedreferenceRao, A.R., & Monroe, K.B. The effect of price, brand name, and store name on buyer's perceptions of product quality: An integrated review. Journal of Marketing Research, 1989, 26, 351 357.en_US
dc.identifier.citedreferenceRobinson, B., & Lakhani, C. Dynamic price models for new product planning. Management Science, 1975, 21, 1113 1122.en_US
dc.identifier.citedreferenceRoth, A.V., Gaimon C., & Krajewski, L. Optimal acquisition of FMS technology subject to technological progress. Decision Sciences, 1991, 22, 308 334.en_US
dc.identifier.citedreferenceScheid, F. Numerical analysis. New York: McGraw-Hill, 1968.en_US
dc.identifier.citedreferenceShank, J. K., & Govindarajan, V. Strategic cost management. New York: Free Press, 1993.en_US
dc.identifier.citedreferenceSmith, S., & Lasdon, L. Solving large sparse nonlinear programs using GRG. ORSA Journal on Computing, 1991, 4 ( 1 ), 1 15.en_US
dc.identifier.citedreferenceTapiero, C.S., Ritchken, P.H., & Reisman, A. Reliability, pricing and quality control. European Journal of Operational Research, 1987, 31, 37 45.en_US
dc.identifier.citedreferenceThompson, G.L., & Teng, J.T. Optimal pricing and advertising policies for new product oligopoly models. Marketing Science, 1984, 3, 148 168.en_US
dc.owningcollnameInterdisciplinary and Peer-Reviewed


Files in this item

Name:
j.1540-5915.1996.tb00858.x.pdf
Size:
1.269MB
Format:
PDF
View/Open

Show simple item record

Remediation of Harmful Language

The University of Michigan Library aims to describe library materials in a way that respects the people and communities who create, use, and are represented in our collections. Report harmful or offensive language in catalog records, finding aids, or elsewhere in our collections anonymously through our metadata feedback form. More information at Remediation of Harmful Language.

Accessibility

If you are unable to use this file in its current format, please select the Contact Us link and we can modify it to make it more accessible to you.