The data the Developer needs to relax the income statement model’s assumption of a fixed forecast are provided by  ZS Associates: Quoting from its web site “When the forces of sales and marketing combine, the impact can be incredible. Together, they have the power to boost market share, increase revenue, lower costs and improve overall business performance.” It has 13,000+ employees in more than 35 offices globally.

This data creates S&OIS and they are referred to as response functions. They describe how demand varies as a function of the marketing technique’s expenditures. As such, they must be able to accommodate the  data structure demands of the supply chain’s mixed and integer math programming (MILP) model of the income statement.

Assuming the S&OIS model has 100-200 products, 100 demand areas, 12 months in the model and 4 marketing techniques, the number of response functions varies from 480k to 1924k.

Confirming this is possible with current response functions’ best practices are:

• Glenn Sabin, ZS subject matter expert, quoting:
  • “The short answer is yes, we can generate the necessary response functions to predict local demand as a function of sales and marketing spend.”
• Dominique Hanssens, Distinguished Research Professor of Marketing, UCLA Anderson School of Management
  • “As Glen illustrated, we can handle response function estimation as needed”
  • “Anyway, the overall picture is as follows: response function estimation will not be a limiting factor, and sofwares like R can handle the computational burden. So, the news is good on that front.”