In this paper, we consider the problem of planning the supply of rewards in a Loyalty Reward Program (LRP). We formulate this problem as a two-stage stochastic linear program with simple recourse, and develop a new, sampling-based stochastic optimisation heuristic procedure for solving it. The proposed heuristic is general and can be applied in other contexts as well. Our computational experiments demonstrate the viability of the modelling and solution approaches for solving realistically-sized (large-scale) problems. Copyright

Additional Metadata
Keywords Heuristic, Loyalty reward programs, LRP, Optimisation, Rewards supply planning, Sample average approximation, Stochastic linear programming
Persistent URL dx.doi.org/10.1504/IJMOR.2012.048902
Journal International Journal of Mathematics in Operational Research
Citation
Cao, Y. (Yuheng), Nsakanda, A, & Diaby, M. (Moustapha). (2012). A stochastic linear programming modelling and solution approach for planning the supply of rewards in Loyalty Reward Programs. International Journal of Mathematics in Operational Research, 4(4), 400–421. doi:10.1504/IJMOR.2012.048902