The high technology products come in generations, where the demand for newer technology generations is strongly influenced by the installed base of earlier generations (such as computers, cameras, notebooks, etc). However, the effect of technology substitution on inventory replenishment policies has received little attention in the supply chain literature. In the hi-technology market, consumers’ purchasing capability, the utility of a product along with the entry of the advanced generation product influence the market expansion/contraction of the products. In this study, the impact of parallel diffusion of two successive generations’ products on inventory policies of the monopolist has been analysed. The demand models have been characterised by considering the life-cycle dynamics for a P-type inventory system. The purpose of this paper is to develop a model for joint pricing and replenishment of technology generation products. The model has been solved by using a genetic algorithm technique. The impact of yearly price drop and the price sensitivity of demand on the profit margins vis-a-vis on replenishment policies has also been studied. The paper also brings forward the dynamics of the launch of newer generations and the pricing strategies on optimal inventory replenishment policies. Numerical illustrations have also been covered in the paper.

1. Introduction. In this world of ever-increasing digitalization, technological upgradation is no more an option, but has become an indispensable reality. Therefore, technological gadgets play an important role in our daily life. Furthermore, the impact of these kinds of products on the economy of a nation can not be ignored. Hence, it becomes all the more important to achieve the operational efficiencies in the supply chain for such technology products. The traditional economic ordered quantity (EOQ) models are based on the assumption that the demand rate of a