Optimization of operation policy on dynamic demand of PSS

Abstract

Product-Service Systems (PSS) provide a new way of value creation, but recent studies of PSS seldom consider the relationship between customers’ demand on PSS and the service capacity of enterprises. Also, they lack discussions on the relationship between customers’ dynamic demand on PSS and the integrated value of PSS. Thus we get inspired from the operation policies of traditional production-inventory systems and traditional service systems, to promote an integrated operation policy analysis of PSS offering. We formulate customer’s perceived value of PSS as the summation of product value and service value. Then the perceived value is compared to a benchmark value to figure out the customers’ purchasing behavior, so as obtaining the steady statement of the demands. Subsequently, we defined an optimization problem to determine the dynamic service policy, namely service capacity allocation, to maximize the enterprise’s revenue. We adopt a numerical study, which shows that the revenue is a convex function to demand and service capacity and we can obtain the optimal service policy when demands are given. Our study shed light on the integrated analysis of balancing PSS demand and service capacity, as well as promote a new way to analyze the value format of PSS.