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Linear Programming Models for Production-Advertising Decisions

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  • Joseph Thomas

    (Cornell University)

Abstract

This paper studies the problem of simultaneously smoothing production and inventory and setting advertising levels. The models given are linear programming models, assuming a deterministic demand-advertising-price relationship. The formulations include both one period and multiperiod models. Advertising has a decreasing effect within each period with a saturation level of advertising included and advertising also has a decreasing effect through time, allowing a build up of a stock of goodwill. A decomposition approach is given which is very efficient computationally due to the simplicity of the subproblems. Other computational aids are discussed; the pricing problem is examined briefly; and a numerical example is given to indicate the possible effect of considering production and advertising (and pricing) decisions together.

Suggested Citation

  • Joseph Thomas, 1971. "Linear Programming Models for Production-Advertising Decisions," Management Science, INFORMS, vol. 17(8), pages 474-484, April.
    • Handle: RePEc:inm:ormnsc:v:17:y:1971:i:8:p:b474-b484
    DOI: 10.1287/mnsc.17.8.B474
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    Cited by:

    1. Dengpan Liu & Subodha Kumar & Vijay S. Mookerjee, 2012. "Advertising Strategies in Electronic Retailing: A Differential Games Approach," Information Systems Research, INFORMS, vol. 23(3-part-2), pages 903-917, September.
    2. Erickson, Gary M., 2011. "A differential game model of the marketing-operations interface," European Journal of Operational Research, Elsevier, vol. 211(2), pages 394-402, June.
    3. Ravi Kumar, K. & Hadjinicola, George C., 1996. "Resource allocation to defensive marketing and manufacturing strategies," European Journal of Operational Research, Elsevier, vol. 94(3), pages 453-466, November.
    4. Ravi Kumar, K. & Loomba, Arvinder P. S. & Hadjinicola, George C., 2000. "Marketing-production coordination in channels of distribution," European Journal of Operational Research, Elsevier, vol. 126(1), pages 189-217, October.
    5. Feng, Jie & Papatla, Purushottam, 2011. "Advertising: Stimulant or Suppressant of Online Word of Mouth?," Journal of Interactive Marketing, Elsevier, vol. 25(2), pages 75-84.
    6. Abhijit Upasani & Reha Uzsoy, 2008. "Incorporating manufacturing lead times in joint production-marketing models: A review and some future directions," Annals of Operations Research, Springer, vol. 161(1), pages 171-188, July.

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