Optimal planning quantities for product transition

Hongmin Li, Stephen C. Graves, Donald B. Rosenfield

Research output: Contribution to journalArticlepeer-review

23 Scopus citations


The replacement of an existing product with a new one presents many challenges. In particular, uncertainties in a new product introduction often lead to extreme cases of demand and supply mismatches. This paper addresses inventory planning decisions for product upgrades when there is no replenishment opportunity during the transition period. We allow product substitution: when a company runs out of the old product, a customer may be offered the new product as a substitute. We show that the optimal substitution decision is a time-varying threshold policy and establish the optimal planning policy. Further, we determine the optimal delay in a new product introduction, given the initial inventory of the old product.

Original languageEnglish (US)
Pages (from-to)142-155
Number of pages14
JournalProduction and Operations Management
Issue number2
StatePublished - Mar 2010


  • Inventory planning
  • New product introduction
  • Product transition
  • Substitution

ASJC Scopus subject areas

  • Management Science and Operations Research
  • Industrial and Manufacturing Engineering
  • Management of Technology and Innovation


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