Optimal Digital Product Maintenance with a Continuous Revenue Stream
General Finance
2017-02-28 v2 Optimization and Control
Abstract
We use a control framework to analyze the digital vendor's profit maximization problem. The vendor captures market share by focusing costly effort on post-launch product maintenance, which influences user perception of the product and drives a revenue stream associated with product use. Our theoretical results show necessary and sufficient conditions for product maintenance to decline over a product's life-cycle, thus showing conditions when Lehman's 7th law of software evolution holds. We also numerically illustrate control paths under different market conditions.
Cite
@article{arxiv.1412.8624,
title = {Optimal Digital Product Maintenance with a Continuous Revenue Stream},
author = {James Fan and Christopher Griffin},
journal= {arXiv preprint arXiv:1412.8624},
year = {2017}
}
Comments
Updated version with improved proofs and sufficiency condition discussion