An optimal control approach to marketing: production planning

Abstract

<p>The problem of finding an optimal advertising and production policy in a firm is analyzed u sing a recently proposed model of a marketing-production system. First it is shown that the optimal control problem underlying the proposed model is a partially singular control prob­ lem. Then, using a reverse time parametric approach, a solution procedure is designed to determine the optimal advertising and production policy for the proposed model. Finally, it is shown that the results deriving from the new model are applicable to problems of capacity expansion in a firm.</p>