Evaluation of innovative projects-an integrative approach

The relationship between the product specifications and its economic value for the manufacturer and the customer is analyzed. The aspects of the product dealt with are cost performance and its implications for pricing policy. An economic model for the manufacturer is combined with a cost/benefit analysis for the prospective customer to yield an integrative model that permits coupling of the demand and supply functions under the common denominator of performance level. It allows the manufacturer to weigh the performance attributes of the product by means of the customer evaluation and attenuates the tendency to overspecify the product. A numerical example based on data gathered on a citrus-fruit sorting robot is given. In this example the profitability frontier, where both parties make profits, is defined and calculated