Two manufacturers currently are competing for sales in two different but equally profitable.

Two manufacturers currently are competing for sales in two different but equally profitable
product lines. In both cases the sales volume for manufacturer 2 is three times as large as that
for manufacturer 1. Because of a recent technological breakthrough, both manufacturers will
be making a major improvement in both products. However, they are uncertain as to what
development and marketing strategy to follow.
If both product improvements are developed simultaneously, either manufacturer can have
them ready for sale in 12 months. Another alternative is to have a “crash program” to
develop only one product first to try to get it marketed ahead of the competition. By doing
this, manufacturer 2 could have one product ready for sale in 9 months, whereas manufacturer
1 would require 10 months (because of previous commitments for its production facilities). For
either manufacturer, the second product could then be ready for sale in an additional 9
For either product line, if both manufacturers market their improved models simultaneously, it
is estimated that manufacturer1would increase its share of the total future sales of this product
by 8 percent of the total (from 25 to 33 percent). Similarly, manufacturer 1 would increase its
share by 20, 30, and 40 percent of the total if it marketed the product sooner than
manufacturer 2 by 2, 6, and 8 months, respectively. On the other hand, manufacturer1would
lose 4, 10, 12, and 14 percent of the total if manufacturer 2 marketed it sooner by 1, 3, 7,
and 10 months, respectively.
Formulate this problem as a two-person, zero-sum game, and then determine which strategy
the respective manufacturers should use according to the minimax criterion.
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