Integrated sales and operations planning with multiple products: Jointly optimizing the number and timing of promotions and production decisions

TY - JOUR

T1 - Integrated sales and operations planning with multiple products

T2 - Jointly optimizing the number and timing of promotions and production decisions

AU - Darmawan, Agus

AU - Wong, Hartanto Wijaya

AU - Thorstenson, Anders

PY - 2020/4

Y1 - 2020/4

N2 - This paper presents a modelling framework for sales and operations planning (S&OP) that considers the integration of price promotion and production planning for multiple products. Such a modelling framework takes into account the potential competition and cannibalization between products, as well as the allocation of shared production resources. The demand model that we adopt combines purchase incidence, consumer choice and purchase quantity in a sequential framework to obtain the dynamics and heterogeneity of consumer response to promotions. Due to large problem sizes, we develop a heuristic approach for solving the resulting joint optimization problem. The results of our numerical study show interesting findings on the optimal number and timing of promotions that take into account the mutual dependence of marketing and production related factors.

AB - This paper presents a modelling framework for sales and operations planning (S&OP) that considers the integration of price promotion and production planning for multiple products. Such a modelling framework takes into account the potential competition and cannibalization between products, as well as the allocation of shared production resources. The demand model that we adopt combines purchase incidence, consumer choice and purchase quantity in a sequential framework to obtain the dynamics and heterogeneity of consumer response to promotions. Due to large problem sizes, we develop a heuristic approach for solving the resulting joint optimization problem. The results of our numerical study show interesting findings on the optimal number and timing of promotions that take into account the mutual dependence of marketing and production related factors.

KW - Cannibalization

KW - Demand model

KW - Forward buying

KW - Product substitution

KW - Promotion

U2 - 10.1016/j.apm.2019.12.001

DO - 10.1016/j.apm.2019.12.001

M3 - Journal article

SN - 0307-904X

VL - 80

SP - 792

EP - 814

JO - Applied Mathematical Modelling

JF - Applied Mathematical Modelling

ER -