Forecasting with innovation diffusion models: A life cycle example in the telecommunications industry

Production operations managers have long been concerned about new product development and the life cycle of these products. Because many products do not sell at constant levels throughout their lives, product life cycles (PLCs) must be considered when developing sales forecasts. Innovation diffusion models have successfully been employed to investigate the rate at which goods and/or services pass through the PLC. This research investigates innovation diffusion models and their relation to the PLC. The model is developed and then tested using modem sales from June 1994 to May 2006.