Note: A Reply to “New Product Diffusion Decisions Under Supply Constraints”

In our prior work on product diffusions in presence of a capacity constraint, we postulated that a firm operating in such an environment should always attempt to fulfill as much of the present demand as is possible with the capacity constraint. In other words, the firm would never have demand backlogged while accumulating inventory. In this note, we derive a sufficient condition for the optimality of such fulfillment policy.

This paper was accepted by Candace A. Yano, operations management.