An aggregate inventory-based model for predicting redemption and liability in loyalty reward programs industry

Aaron Luntala Nsakanda (), Moustapha Diaby () and Yuheng Cao ()
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Aaron Luntala Nsakanda: Carleton University
Moustapha Diaby: University of Connecticut
Yuheng Cao: Carleton University

Information Systems Frontiers, 2011, vol. 13, issue 5, No 8, 707-719

Abstract: Abstract We propose a predictive model of redemption and liability to support short, medium, and long term planning and operational decision-making in Loyalty Reward Programs (LRPs). The proposed approach is an aggregate inventory model in which the liability of points is modeled as a stochastic process. An illustrative example is discussed as well as a real-life implementation of the approach to facilitate use and deployment considerations in the context of a frequent flyer program, an airline industry based LRP.

Keywords: Loyalty reward programs; Markov chain; Forecasting; Redemption; Liability; Accumulation (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (2)

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DOI: 10.1007/s10796-010-9247-z

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