Dynamic Release Management: A Market Intensity Approach

42 Pages Posted: 6 Oct 2016

See all articles by Daniel Adelman

Daniel Adelman

The University of Chicago Booth School of Business

Angelo Mancini

University of Chicago - Booth School of Business

Date Written: October 3, 2016

Abstract

We consider a release manager who sequentially releases new versions of her product, and ask how she should account for the overall level of competitive intensity in her industry. We model the problem within a combinatorial framework in which new releases consist of discrete features. Motivated by a simple mixed-integer non-linear program (MINLP) that formed the basis of a collaboration with industry sponsors, we propose an approach in which the manager tunes her discount factor to capture the aggregate impact of market intensity. This technique relies on a multiplicative compound Poisson model of market intensity, which we justify by showing how it emerges naturally in a multi-firm equilibrium. This intensity equilibrium facilitates operational analysis, as it captures the relationships among firms at a statistical level, as opposed to a release-by-release strategic level. We also examine how ignoring the existence and/or stochasticity of the outside market can lead to suboptimal outcomes. To facilitate implementation, we provide a numerical procedure for calibrating the market intensity model based on the stylized multi-firm game-theoretic framework.

Keywords: product development, release management, semi-Markov decision processes, approximate dynamic programming

Suggested Citation

Adelman, Daniel and Mancini, Angelo, Dynamic Release Management: A Market Intensity Approach (October 3, 2016). Chicago Booth Research Paper No. 16-19, Available at SSRN: https://ssrn.com/abstract=2847264 or http://dx.doi.org/10.2139/ssrn.2847264

Daniel Adelman (Contact Author)

The University of Chicago Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
773-834-2019 (Phone)

Angelo Mancini

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

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