Universität zu Köln

Khalilzadeh, Majid, Neghabi, Hossein and Ahadi, Ramin . AN APPLICATION OF APPROXIMATE DYNAMIC PROGRAMMING IN MULTI-PERIOD MULTI-PRODUCT ADVERTISING BUDGETING. J. Ind. Manag. Optim.. SPRINGFIELD: AMER INST MATHEMATICAL SCIENCES-AIMS. ISSN 1553-166X

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Abstract

Advertising has always been considered a key part of marketing strategy and played a prominent role in the success or failure of products. This paper investigates a multi-product and multi-period advertising budget alloca-tion, determining the amount of advertising budget for each product through the time horizon. Imperative factors including life cycle stage, BCG matrix class, competitors' reactions, and budget constraints affect the joint chain of decisions for all products to maximize the total profits. To do so, we define a stochastic sequential resource allocation problem and use an approximate dy-namic programming (ADP) algorithm to alleviate the huge size of the problem and multi-dimensional uncertainties of the environment. These uncertainties are the reactions of competitors based on the current status of the market and our decisions, as well as the stochastic effectiveness (rewards) of the taken ac-tion. We apply an approximate value iteration (AV I) algorithm on a numerical example and compare the results with four different policies to highlight our managerial contributions. In the end, the validity of our proposed approach is assessed against a genetic algorithm. To do so, we simplify the environment by fixing the competitor's reaction and considering a deterministic environment.

Item Type:	Journal Article
Creators:	Creators Email ORCID ORCID Put Code Khalilzadeh, Majid UNSPECIFIED UNSPECIFIED UNSPECIFIED Neghabi, Hossein UNSPECIFIED UNSPECIFIED UNSPECIFIED Ahadi, Ramin UNSPECIFIED UNSPECIFIED UNSPECIFIED
URN:	urn:nbn:de:hbz:38-570080
DOI:	10.3934/jimo.2021202
Journal or Publication Title:	J. Ind. Manag. Optim.
Publisher:	AMER INST MATHEMATICAL SCIENCES-AIMS
Place of Publication:	SPRINGFIELD
ISSN:	1553-166X
Language:	English
Faculty:	Unspecified
Divisions:	Unspecified
Subjects:	no entry
Uncontrolled Keywords:	Keywords Language ALLOCATION; SALES; MEDIA; MODEL Multiple languages Engineering, Multidisciplinary; Operations Research & Management Science; Mathematics, Interdisciplinary Applications Multiple languages
URI:	http://kups.ub.uni-koeln.de/id/eprint/57008