Article ID: | iaor201529925 |
Volume: | 59 |
Issue: | 4 |
Start Page Number: | 26 |
End Page Number: | 39 |
Publication Date: | Mar 2016 |
Journal: | Omega |
Authors: | Zhang H, Escudero L F, Beltran-Royo C |
Keywords: | stochastic processes, optimization, simulation, economics, advertising |
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 proposed model is a convex optimization problem that can readily be solved by plain use of standard optimization software. It has been tested in a case study derived from a real advertising campaign. In the 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.