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Coordinated dynamic control of marketing and production
Author(s) -
Yang Jian,
Zhang Xiaolong
Publication year - 2009
Publication title -
naval research logistics (nrl)
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.665
H-Index - 68
eISSN - 1520-6750
pISSN - 0894-069X
DOI - 10.1002/nav.20348
Subject(s) - heuristics , marketing , complementarity (molecular biology) , production (economics) , profit maximization , marketing strategy , marketing management , profit (economics) , marketing mix , business , maximization , economics , computer science , microeconomics , mathematical optimization , mathematics , genetics , biology
We study the dynamic profit maximization problem for a firm exercising control on both marketing and production. The firs 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. Naval Research Logistics 2009