Research on Manufacturer’s Selective Decisions on Product Improvement or Value-Added Service
HAN Xiaopeng，ZHANG Xumei，FU Hongyong，ZHANG Yang
1. Chongqing University, Chongqing, China; 2. Institute of Business Administration and Economic Development of Chongqing University, Chongqing, China; 3. Southwest University of Political & Law, Chongqing, China
Abstract Based on customer utility theory, the optimal profit decision model is proposed, and the optimal decision that the manufacturer should choose is obtained. The results indicate that when the cost of value-added service and that of product improvement are both large, it would be better for the manufacturer to improve products only; otherwise, improving products and providing value-added service simultaneously will be the optimal policy. However, it is always not a dominant strategy for the manufacturer to only provide value-added service. In addition, the manufacturer’s optimal decision depends on the comparison among the product improvement cost coefficient, the value-added service cost coefficient and the corresponding threshold value (or set of threshold values).
2016, Vol. 13 
