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Management Science
Article . 2022 . Peer-reviewed
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SSRN Electronic Journal
Article . 2019 . Peer-reviewed
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Sales Effort Management Under All-or-Nothing Constraint

Authors: Longyuan Du; Ming Hu 0002; Jiahua Wu;

Sales Effort Management Under All-or-Nothing Constraint

Abstract

We consider a sales effort management problem under an all-or-nothing constraint. The seller will receive no bonus/revenue if the sales volume fails to reach a predetermined target at the end of the sales horizon. Throughout the sales horizon, the sales process can be moderated by the seller through costly effort. We show that the optimal sales rate is nonmonotonic with respect to the remaining time or the outstanding sales volume required to reach the target. Generally, it has a watershed structure, such that for any needed sales volume, there exists a cutoff point on the remaining time above which the optimal sales rate decreases in the remaining time and below which it increases in the remaining time. We then study easy-to-compute heuristics that can be implemented efficiently. We start with a static heuristic derived from the deterministic analog of the stochastic problem. With an all-or-nothing constraint, we show that the performance of the static heuristic hinges on how the profit-maximizing rate fares against the target rate, which is defined as the sales target divided by the length of the sales horizon. When the profit-maximizing rate is higher than the target rate, the static heuristic adopting the optimal deterministic rate is asymptotically optimal with negligible loss. On the other hand, when the profit-maximizing rate is lower than the target rate, the performance loss of any asymptotically optimal static heuristic is of an order greater than the square root of the scale parameter. To address the poor performance of the static heuristic in the latter case, we propose a modified resolving heuristic and show that it is asymptotically optimal and achieves a logarithmic performance loss. This paper was accepted by Gabriel Weintraub, revenue management and market analytics.

Country
United Kingdom
Related Organizations
Keywords

Technology, Operations Research, 330, applications, revenue management, COMPENSATION PLANS, Social Sciences, ALLOCATION, DEVELOPMENT COMPETITION, Business & Economics, dynamic programming-optimal control, Tourism and Services, Science & Technology, salesforce, 15 Commerce, Management, Tourism and Services, Operations Research & Management Science, CONTESTS, Management, all-or-nothing constraint, marketing, 08 Information and Computing Sciences, 15 Commerce, REVENUE MANAGEMENT

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    popularity
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    Top 10%
    influence
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    impulse
    This indicator reflects the initial momentum of an article directly after its publication, based on the underlying citation network.
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selected citations
These citations are derived from selected sources.
This is an alternative to the "Influence" indicator, which also reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Citations provided by BIP!
popularity
This indicator reflects the "current" impact/attention (the "hype") of an article in the research community at large, based on the underlying citation network.
BIP!Popularity provided by BIP!
influence
This indicator reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Influence provided by BIP!
impulse
This indicator reflects the initial momentum of an article directly after its publication, based on the underlying citation network.
BIP!Impulse provided by BIP!
13
Top 10%
Average
Average
Green