Facility flexibility: a manufacturing and marketing interface

The strategic interface between manufacturing and marketing is analyzed for a firm investing in a single facility to manufacture a sequence of high volume products with short life cycles. The extent of investment in facility flexibility and the dynamic price charged over each product´s life cycle are key decision variables linking the manufacturing and marketing domains. The investment in facility flexibility impacts on a several factors contributing to the dynamic profit maximizing objective. For example, the investment in facility flexibility impacts on: the firm´s market entry times, dynamic production costs, and optimal pricing strategies over the lifetime of each product generation. Several dynamic elements are captured in the decision making process including price competition, pioneering advantage, facility efficiency effects, and volume based learning