Author's School

Olin Business School

Author's Department/Program

Business Administration


English (en)

Date of Award

Summer 9-1-2014

Degree Type


Degree Name

Doctor of Philosophy (PhD)

Chair and Committee

Fuqiang Zhang


The dissertation consists of three papers on the upgrading strategy in capacity management. This first paper studies a multiclass, multiperiod capacity allocation problem with general upgrading. We characterize the optimal allocation policy that has a simple two-step structure and can be solved sequentially. Although solving the optimal policy is computationally intensive, we provide an efficient heuristic that perform well under a wide range of practical situations. In the rest of the dissertation, we study the impact of opportunistic behavior on a firm's upgrading strategy. The firm sells two products and uses the high-quality product to upgrade the demand for low-quality product if needed. Customers can be opportunistic in the sense that they purposely choose to buy the low-quality product in anticipation of upgrading. We find that such opportunistic behavior may either hurt or benefit the firm depending on different conditions.


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