A Comparative Study of Deterministic and Stochastic Programming Approaches to Optimise Marketing Campaigns

Abstract

Many factors continually influence customer behavioural patterns, leading to complex and uncertain decision-making. Traditional deterministic approaches, while useful, do not account for uncertainty, potentially causing suboptimal decisions and reduced profitability. Retailers should adopt models that incorporate uncertainty while maximising profitability to address this. This paper proposes a two-stage stochastic programming model, referred to as a recourse model, to optimise a marketing campaign's profitability while providing solutions that hedge against uncertainty. A deterministic counterpart is also proposed, based on two existing deterministic models from the literature. The main contribution of this study involves the formulation of the recourse model and the added value of a stochastic approach in handling uncertainty more effectively. The proposed recourse model opens up new frontiers for marketing campaign optimisation by incorporating demand uncertainty and providing decisions that hedge against uncertainty.

Alternate abstract:

Baie faktore beïnvloed voortdurend kliënte se gedragspatrone, wat lei tot komplekse en onsekere besluitneming. Tradisionele deterministiese benaderings, hoewel nuttig, hou nie rekening met onsekerheid nie, wat moontlik suboptimale besluite en verminderde winsgewendheid kan veroorsaak. Kleinhandelaars moet modelle aanneem wat onsekerheid insluit terwyl hulle winsgewendheid maksimeer om dit aan te spreek. Hierdie artikel stel 'n twee-stadium stogastiese programmeringsmodel voor, waarna verwys word as 'n verhaalmodel, om die winsgewendheid van 'n bemarkingsveldtog te optimaliseer terwyl oplossings gebied word wat onsekerheid beskerm. 'n Deterministiese eweknie word ook voorgestel, gebaseer op twee bestaande deterministiese modelle uit die literatuur. Die hoofbydrae van hierdie studie behels die formulering van die verhaalmodel en die toegevoegde waarde van 'n stogastiese benadering om onsekerheid meer effektief te hanteer. Die voorgestelde verhaalmodel open nuwe grense vir bemarkingsveldtogoptimalisering deur vraagonsekerheid in te sluit en besluite te verskaf wat onsekerheid beskerm.