Dynamic catalog mailing policies

• 成果类型: Article
• 署名作者: Simester, Duncan I.; Sun, Peng; Tsitsiklis, John N.
• 署名单位: Massachusetts Institute of Technology (MIT); Duke University; Massachusetts Institute of Technology (MIT); Massachusetts Institute of Technology (MIT)
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.1050.0504
• 发表日期: 2006
• 页码: 683-696
• 关键词: dynamic optimization; catalog mailing; field test; Markov Decision Process

摘要

Deciding who should receive a mail-order catalog is among the most important decisions that mail-order-catalog firms must address. In practice, the current approach to the problem is invariably myopic: firms send catalogs to customers who they think are most likely to order from that catalog. In doing so, the firms overlook the long-run implications of these decisions. For example, it may be profitable to mail to customers who are unlikely to order immediately if sending the current catalog increases the probability of a future order. We propose a model that allows firms to optimize mailing decisions by addressing the dynamic implications of their decisions. The model is conceptually simple and straightforward to implement. We apply the model to a large sample of historical data provided by a catalog firm and then evaluate its performance in a large-scale field test. The findings offer support for the proposed model but also identify opportunities for further improvement.