This paper discusses decision-making for new-technology investment from thefollowing three parts: marketing analysis for innovation-effect, technology choice, andcapacity expansion. In parts of marketing analysis for innovation-effect, a multi-factsmodel that estimates market share and models of new product diffusion is introduced,and the incentive and impact of process innovations is discussed. Technology choice isaddressed in two cases: consider or not consider the appearance of new technology.emphases on technology choice with research and development (R&D). In case of notconsider market technology, we illustrate that Lee's conclusion is wrong, and the rightconclusion is given. To the technology choice with R&D and market technology, aMarkov decision process (MDP) model is constructed, and the optimal policy of whichis obtained. Finally, we deal with capacity expansion in cases of one-period,multi-period, and continue time respectively.
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