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A Decision-making Strategy to Maximize the Information Value of Weather Forecasts in a Customer Relationship Management (CRM) Problem of the Leisure Industry  

Lee, Joong-Woo (인제대학교 경영학부)
Lee, Ki-Kwang (단국대학교 경영학부)
Publication Information
Korean Management Science Review / v.27, no.1, 2010 , pp. 33-43 More about this Journal
Abstract
This paper presents a method for the estimation and analysis of the economic value of weather forecasts for CRM decision-making problems in the leisure industry. Value is calculated in terms of the customer's satisfaction returned from the user's decision under the specific payoff structure, which is itself represented by a customer's satisfaction ratio model. The decision is assessed by a modified cost-loss model to consider the customer's satisfaction instead of the loss or cost. Site-specific probability and deterministic forecasts, each of which is provided in Korea and China, are applied to generate and analyze the optimal decisions. The application results demonstrate that probability forecasts have greater value than deterministic forecasts, provided that the users can locate the optimal decision threshold. This paper also presents the optimal decision strategy for specific customers with a variety of satisfaction patterns.
Keywords
Customer Relationship Management(CRM); Cost-loss Model; Customer's Satisfaction Ratio Model; Value Score;
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