Coordinated dynamic control of marketing and production

Document Type

Article

Publication Date

6-1-2009

Abstract

We study the dynamic profit maximization problem for a firm exercising control on both marketing and production. The firm's marketing effort impacts the current-period demand, which in turn affects future demand in a dissipating fashion. Under linear-cost and zero-leadtime assumptions, we show that the firm should follow base-point rules for both marketing and production, whereas trends of the base points reflect a certain complementarity between marketing and production. We obtain comparable results when marketing costs are convex. Our computational study identifies conditions under which simple fixed-marketing-effort and fixed-marketing-target heuristics would perform well. ©2009 Wiley Periodicals, Inc.

Identifier

67649804459 (Scopus)

Publication Title

Naval Research Logistics

External Full Text Location

https://doi.org/10.1002/nav.20348

e-ISSN

15206750

ISSN

0894069X

First Page

348

Last Page

365

Issue

4

Volume

56

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