Multi-Period Optimal Capacity Strategy Based on Consumer Behavior Involved in Social Media

Abstract

AbstractSocial media and consumer behavior are increasingly important in business nowadays. As a new form of advertising, social media do facilitate the increase in demand and bring a challenge to manufactures. While researchers demonstrated that insufficient capacity generates the loss in the process of sales, an opposite conclusion has been obtained that the profit is larger in insufficient capacity. This study investigates this situation of a manufacturer. We develop a multi period model of insufficient capacity concerning with social media and consumer behavior. An calculation of the model indicates that a great change appears in the demand of each period. To ensure the maximum profit, the capacity of each period is computed. And the profit is almost 8 times larger than that we do not consider social media and consumer behavior. We discuss the implications of our findings for both theory and practice.