Abstract: In order to help small and medium-sized enterprises with self-produced and self-sold products make reasonable decisions on output and publicity efforts, a decision-making model is established for two situations of production capacity exceeding and below the threshold. The optimal decision is established by using the extremum method of multivariate functions and the K-T condition method of linear constrained quadratic programming. The impact of the decision maker’s risk aversion and product unit cost on utility in two situations is compared and analyzed by using Matlab. Results show that production capacity levels can affect output and publicity efforts decisions, but there is always a fixed proportional relationship between them; when product return rates increase, enterprises should actively expand production and reduce publicity efforts; enterprises with relatively low capacity levels should not blindly increase production capacity, if the production capacity is close to the threshold, more consideration should be given to improve product performance or optimize online services; for enterprises with high product return and depreciation rates, the focus should be on reducing the return rate.

Key words: pre-sale, capacity constraints, price fluctuations, risk aversion