A comparative analysis of decision making procedures in the catalog sales industry

Abstract

In this article Gabriel Bitran and Susana Mondschein discuss the most important features of the mailing process in the catalog sales industry. They contrast a 'conventional' approach for mailing and inventory decisions, that is recommended in the specialized literature and has been observed in several catalog companies, with an analytical methodology proposed by the authors. They show, that in general, the latter leads to systematically better solutions in terms of the companies' profitability. They also present an optimal method for computing the customer lifetime value and discuss the importance of this concept when making decisions concerning the acquisition of new customers, retention of old customers, and valuation of a catalog company.