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A fuzzy mathematical programming approach for cross-sell optimization in retail banking

Author

Listed:
  • T Bhaskar

    (John F Welch Technology Centre)

  • R Sundararajan

    (John F Welch Technology Centre)

  • P G Krishnan

    (John F Welch Technology Centre)

Abstract

We consider the problem of selecting the optimal list of customers to target for a cross-sell campaign in a retail bank. Target selection involves taking estimates of several parameters (response propensity, expected volume, expected profit from a customer, etc) and deciding on the list of customers to whom the offer should be sent such that a certain set of business objectives are met/optimized. We discuss some of the issues related to the target selection process, namely those of unreliable estimates and computational complexity of the problem. We propose a fuzzy mathematical programming technique to address these issues. The imprecise parameters and constraints are represented as triangular fuzzy numbers, while the problem of computational complexity is addressed through a group-level formulation. We use an example of a real-life cross-sell problem for a bank to demonstrate the method. We also provide some sensitivity analyses on critical resources.

Suggested Citation

  • T Bhaskar & R Sundararajan & P G Krishnan, 2009. "A fuzzy mathematical programming approach for cross-sell optimization in retail banking," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 60(5), pages 717-727, May.
    • Handle: RePEc:pal:jorsoc:v:60:y:2009:i:5:d:10.1057_palgrave.jors.2602609
    DOI: 10.1057/palgrave.jors.2602609
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    References listed on IDEAS

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    Cited by:

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    3. Bigler, T. & Kammermann, M. & Baumann, P., 2023. "A matheuristic for a customer assignment problem in direct marketing," European Journal of Operational Research, Elsevier, vol. 304(2), pages 689-708.
    4. Ramasubramanian Sundararajan & Tarun Bhaskar & Abhinanda Sarkar & Sridhar Dasaratha & Debasis Bal & Jayanth K. Marasanapalle & Beata Zmudzka & Karolina Bak, 2011. "Marketing Optimization in Retail Banking," Interfaces, INFORMS, vol. 41(5), pages 485-505, October.
    5. Özden Gür Ali & Yalçın Akçay & Serdar Sayman & Emrah Y?lmaz & M. Hamdi Özçelik, 2017. "Cross-Selling Investment Products with a Win-Win Perspective in Portfolio Optimization," Operations Research, INFORMS, vol. 65(1), pages 55-74, February.
    6. Talla Nobibon, Fabrice & Leus, Roel & Spieksma, Frits C.R., 2011. "Optimization models for targeted offers in direct marketing: Exact and heuristic algorithms," European Journal of Operational Research, Elsevier, vol. 210(3), pages 670-683, May.

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