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Allocating Resources between Research and Development: A Macro Analysis

Author

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  • D. P. Gaver

    (Naval Postgraduate School, Monterey, California)

  • V. Srinivasan

    (The University of Rochester)

Abstract

This paper attempts to coordinate at the macro level the research potential and the development capability of an organization in a competitive environment. New product ideas generate from various sources of research which are then processed (preliminary screening, market appraisal, technical development etc.) by the development section. In view of the randomness present in the above process, a backlog of ideas will normally be present awaiting development. The longer the delay in processing them, the greater are the chances of a competitor introducing the product in the meantime. Simple queueing models are set up which abstract the essence of the problem, and reveal the causal relationships of the underlying structure. The decision variable (relationship of the research rate to the development rate) is optimized, and its sensitivity to changes in the parameters describing the environment is examined. Generalizations of the approach using Monte-Carlo methods arc also indicated.

Suggested Citation

  • D. P. Gaver & V. Srinivasan, 1972. "Allocating Resources between Research and Development: A Macro Analysis," Management Science, INFORMS, vol. 18(9), pages 492-501, May.
  • Handle: RePEc:inm:ormnsc:v:18:y:1972:i:9:p:492-501
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    File URL: http://dx.doi.org/10.1287/mnsc.18.9.492
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    Cited by:

    1. Scott A. Shane & Karl T. Ulrich, 2004. "50th Anniversary Article: Technological Innovation, Product Development, and Entrepreneurship in Management Science," Management Science, INFORMS, vol. 50(2), pages 133-144, February.
    2. S. D. Deshmukh & Suresh Jain, 1975. "Optimal Control of Service Quality in a Queueing System," Discussion Papers 176, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    3. S. D. Deshmukh & S. D. Chikte, 1976. "Dynamic Investment Strategies for a Risky R&D Project," Discussion Papers 198, Northwestern University, Center for Mathematical Studies in Economics and Management Science.

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