Risk behaviour and optimum advertising with a stochastic dynamic sales response

Charles S. Tapiero, Jehoshua Eliashberg, Yoram Wind

Research output: Contribution to journalArticle

Abstract

A stochastic (diffusion) sales response model to advertising is postulated. Optimum advertising policies are then found by solving a stochastic control problem with reflecting boundaries. Analytical results are obtained and interpreted to yield insights regarding a firm's risk behaviour and its optimal advertising policy.

Original languageEnglish (US)
Pages (from-to)299-304
Number of pages6
JournalOptimal Control Applications and Methods
Volume8
Issue number3
DOIs
StatePublished - Jan 1 1987

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Keywords

  • Optimal advertising
  • Sales response models
  • Stochastic optimal control

ASJC Scopus subject areas

  • Control and Systems Engineering
  • Software
  • Control and Optimization
  • Applied Mathematics

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