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Product Portfolio and Investment Policy - Finance

Product Portfolio and Investment Policy

A company develops and sells consumer products with fairly short lifecycle. After the product has been successfully launched, its revenue peaks, and then goes down as shown in the Figure. To keep the business going the company has to maintain a continuous process of new product research and development. A part of the company revenue is therefore reinvested into R&D, and another significant part is spent on introduction of new products. We are investigating how the investment policy affects the business.
We are modeling each product individually as an agent, so the product portfolio is a population of agents. The company finances and investment policy is a system dynamics component. The product lifecycle is naturally represented as a statechart that starts in the Research state and is deleted from the model once it is discontinued or killed. The implementation of the interface between the products-agents and the system dynamics part includes usage of statistics over the agent population in the system dynamics formulas and a condition event that constantly minitors an SD stock InvestmentCapital and creates a new agent (R&D project) when the stock reaches a certain level.

The model was created with AnyLogic - simulation software / Product management

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