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Article: Optimal Advertising Outsourcing Strategy with Different Effort Levels and Uncertain Demand

TitleOptimal Advertising Outsourcing Strategy with Different Effort Levels and Uncertain Demand
Authors
Keywordsproduction
advertising outsourcing
principal-agent problem
revelation principle
uncertain demand
Issue Date2019
PublisherTaylor & Francis Ltd. The Journal's web site is located at http://www.tandf.co.uk/journals/titles/00207543.asp
Citation
International Journal of Production Research, 2019, v. 58 n. 7, p. 2016-2035 How to Cite?
AbstractThis paper studies the issue of advertising outsourcing and production planning for a manufacturer facing asymmetric advertising cost and uncertain market demand. To improve product sales, a manufacturer would hire an advertising agency to provide professional service on product advertising before the production takes place. A contract taking into account both advertising effort level and payment is introduced to incentivize the advertising agency to report the exact cost to the manufacturer. Furthermore, a model with the goal of maximising the manufacturer's net profit is proposed, in which both product demand and payment to the advertising agency are affected by the advertising effort level. Analytical solutions of the optimal strategies including the optimal advertising effort level and the optimal payment to the advertising agency are derived. Optimal retail price and the optimal production quantity are also obtained for the manufacturer in making managerial decisions.
Persistent Identifierhttp://hdl.handle.net/10722/287668
ISSN
2023 Impact Factor: 7.0
2023 SCImago Journal Rankings: 2.668
ISI Accession Number ID

 

DC FieldValueLanguage
dc.contributor.authorXIE, Y-
dc.contributor.authorHE, W-
dc.contributor.authorChing, WK-
dc.contributor.authorTai, AH-
dc.contributor.authorIp, WH-
dc.contributor.authorYung, KL-
dc.contributor.authorSong, Na-
dc.date.accessioned2020-10-05T12:01:29Z-
dc.date.available2020-10-05T12:01:29Z-
dc.date.issued2019-
dc.identifier.citationInternational Journal of Production Research, 2019, v. 58 n. 7, p. 2016-2035-
dc.identifier.issn0020-7543-
dc.identifier.urihttp://hdl.handle.net/10722/287668-
dc.description.abstractThis paper studies the issue of advertising outsourcing and production planning for a manufacturer facing asymmetric advertising cost and uncertain market demand. To improve product sales, a manufacturer would hire an advertising agency to provide professional service on product advertising before the production takes place. A contract taking into account both advertising effort level and payment is introduced to incentivize the advertising agency to report the exact cost to the manufacturer. Furthermore, a model with the goal of maximising the manufacturer's net profit is proposed, in which both product demand and payment to the advertising agency are affected by the advertising effort level. Analytical solutions of the optimal strategies including the optimal advertising effort level and the optimal payment to the advertising agency are derived. Optimal retail price and the optimal production quantity are also obtained for the manufacturer in making managerial decisions.-
dc.languageeng-
dc.publisherTaylor & Francis Ltd. The Journal's web site is located at http://www.tandf.co.uk/journals/titles/00207543.asp-
dc.relation.ispartofInternational Journal of Production Research-
dc.rightsAOM/Preprint Before Accepted: his article has been accepted for publication in [JOURNAL TITLE], published by Taylor & Francis. AOM/Preprint After Accepted: This is an [original manuscript / preprint] of an article published by Taylor & Francis in [JOURNAL TITLE] on [date of publication], available online: http://www.tandfonline.com/[Article DOI]. Accepted Manuscript (AM) i.e. Postprint This is an Accepted Manuscript of an article published by Taylor & Francis in [JOURNAL TITLE] on [date of publication], available online: http://www.tandfonline.com/[Article DOI].-
dc.subjectproduction-
dc.subjectadvertising outsourcing-
dc.subjectprincipal-agent problem-
dc.subjectrevelation principle-
dc.subjectuncertain demand-
dc.titleOptimal Advertising Outsourcing Strategy with Different Effort Levels and Uncertain Demand-
dc.typeArticle-
dc.identifier.emailChing, WK: wching@hku.hk-
dc.identifier.authorityChing, WK=rp00679-
dc.description.naturelink_to_subscribed_fulltext-
dc.identifier.doi10.1080/00207543.2019.1641235-
dc.identifier.scopuseid_2-s2.0-85083078316-
dc.identifier.hkuros314748-
dc.identifier.volume58-
dc.identifier.issue7-
dc.identifier.spage2016-
dc.identifier.epage2035-
dc.identifier.isiWOS:000479893700001-
dc.publisher.placeUnited Kingdom-
dc.identifier.issnl0020-7543-

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