Dynamic time-to-market and operational decisions in high technology firms

In this dissertation, we develop comprehensive mathematical models to jointly optimize new product introduction timing and post-introduction operational decisions for component suppliers.; In the first part of the dissertation, we study a component supplier who sells to a single manufacturer. Due to competition, the supplier builds to stock and is a price taker. Prior to market entry, the supplier performs process design activities, which improve manufacturing yield and the chances of getting qualified for the manufacturer's product. However, a long delay in market entry allows competitors to enter the market before the supplier, reducing the supplier's market share. After entering the market, the supplier makes production decisions considering several factors such as market share and yield, which depend on the earlier time-to-market decision. Realizing this dependency, we optimize time-to-market and production decisions in relation to each other. We establish the optimality of a threshold policy under which the supplier optimally stops process design and enters the market if the number of competitors in the market exceeds a certain threshold. We also prove that the supplier's optimal production policy is a state-dependent, base-stock policy. A numerical study shows that the dynamic optimal time-to-market strategy significantly improves profits.; In the second part of the dissertation, we study a component supplier who sells to two customers: one requires qualification and the other does not. The market for the component is not perfectly competitive; hence the supplier sets the sales price. We establish the optimality of a threshold policy that prescribes when to stop process design and enter the market. We also prove that the supplier's optimal production control and pricing policy is a state-dependent base-stock list price policy. We characterize structural properties of the optimal policy, which improve computational efficiency.; In the final part of the dissertation, we describe the development of a decision support tool for new product introduction timing and post-introduction production decisions for a major hard disk drive supplier, Hitachi Global Storage Technologies, Inc. In collaboration with a project team from the company, we carry out several case studies with actual data and report some of our results.