An optimal dynamic advertising model with inverse inventory sensitive demand effect for deteriorating items

作者：Xu, Minghui; Zuo, Xiaode^*

来源：Journal of Systems Science and Systems Engineering, 2017, 26(5): 593-608.

DOI：10.1007/s11518-016-5316-2

• Dynamic advertising
• inverse inventory sensitive demand
• deteriorating items
• maximum principle

This paper proposes a dynamic advertising model for deteriorating items, and the demand is influenced by goodwill and inventory level. The goodwill affected by advertising effort has a positive effect on demand while the inventory level has a negative effect on demand, which is named as inverse inventory sensitive demand effect. We assume that the deteriorating rate could be influenced by the inventory level and we determine the deteriorating rate formulation based on this assumption. The optimal advertising effort and inventory level are obtained by solving the optimization problem based on Pontryagin's maximum principle. Furthermore, numerical studies are provided and some managerial insights are presented.

• 出版日期2017-10
• 单位暨南大学