Optimization model for salesforce compensation under effort level

An important decision faced by sales manager's toady is precisely how much compensationshould be offered to the salesforce. In this paper, we adopt the model structure and prospecting technology of Joseph [11]. We set up a dynamic mathematical model to study how a firm can design an optimal incentives scheme in order to pursue the maximum profit from the salesforce effort in target market, while the firm launch new product. From the sensitivity analysis of the optimal solution of the model this paper discusses the effects of the effort level, commission rate and total profits.