On the optimal frequency of multiple generation product introductions

This paper considers a firm that introduces multiple generations of a product to the market at regular intervals. We assume that the firm has only a single production generation in the market at any time. To maximize the total profit within a given planning horizon, the firm needs to decide the optimal frequency to introduce new product generations, taking into account the trade-off between sales revenues and product development costs. We model the sales quantity of each generation as a function of the technical decay and installed base effects. We analytically examine the optimal frequency for introducing new product generations as a function of these parameters.