open access publication

Article, 2020

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

Applied Mathematical Modelling, ISSN 0307-904X, 1872-8480, Volume 80, Pages 792-814, 10.1016/j.apm.2019.12.001

Contributors

Darmawan, Agus 0000-0003-1291-1680 [1] Wong, Hartanto Wijaya 0000-0002-6439-6310 (Corresponding author) [2] Thorstenson, Anders 0000-0001-9480-3725 [2]

Affiliations

  1. [1] Gadjah Mada University
    2. [NORA names: Indonesia; Asia, South];
  2. [2] Aarhus University
    3. [NORA names: AU Aarhus University; University; Denmark; Europe, EU; Nordic; OECD]

Abstract

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.

Keywords

S&OP, allocation, approach, cannibalism, choice, competition, consumer choice, consumer responses, consumers, decision, demand, demand model, dependence, dynamics, factors, findings, framework, heterogeneity, heterogeneity of consumer response, heuristic approach, incidence, integrated sales, integration, joint optimization problem, market, model, modeling framework, multiple products, mutual dependence, number, numerical study, operation, optimal number, optimization problem, planning, potential competition, price promotions, problem, problem size, product related factors, production, production decisions, production planning, production resources, promoter, purchase, purchase incidence, purchase quantity, quantity, related factors, resources, response, results, sales, sequential framework, size, study, time, timing of promotions

Data Provider: Digital Science

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