Multiperiod Multiproduct Advertising Budgeting: Stochastic Optimization Modeling
Abstract: We propose a stochastic optimization model for the Multiperiod Multiproduct Advertising Budgeting problem, so that the expected profit of the advertising investment is maximized. The model is a convex optimization problem that can readily be solved by plain use of standard optimization software. It has been tested for planning a realistic advertising campaign. In our case study, the expected profit of the stochastic approach has been favorably compared with the expected profit of the deterministic approach. This provides a quantitative argument in favor of the stochastic approach for managerial decision making in a data-driven framework.
Keywords: Marketing, advertising budgeting, deterministic optimization, stochastic optimization, convex optimization.
Category 1: Applications -- OR and Management Sciences (Marketing )
Entry Submitted: 08/05/2014
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