An optimal curtailment strategy for catalog delivery in direct mail

This study proposes a curtailment strategy for catalog delivery to direct mail customers, where catalog delivery to a customer is curtailed when he/she shows no response for the last K issues of catalogs successively delivered to the customer. For the purpose of determining the value of K, the expected catalog profile per customer is defined, which is to be maximized. Two types of models for the expected catalog profit are formulated; (i) a model for a customer who has responded to catalogs only a few times up to this point, and (ii) a model for a customer who has responded many times. The conditions under which an optimal curtailment time exists are then clarified for both models. The optimal curtailment strategy for catalog delivery is also discussed based on the above two models. Numerical illustrations are presented to illustrate the proposed optimal curtailment strategy.