Article ID Journal Published Year Pages File Type
10323539 Expert Systems with Applications 2005 11 Pages PDF
Abstract
Although most data-mining (DM) models are complex and general in nature, the implementation of such models in specific environments is often subject to practical constraints (e.g. budget constraints) or thresholds (e.g. only mail to customers with an expected profit higher than the investment cost). Typically, the DM model is calibrated neglecting those constraints/thresholds. If the implementation constraints/thresholds are known in advance, this indirect approach delivers a sub-optimal model performance. Adopting a direct approach, i.e. estimating a DM model in knowledge of the constraints/thresholds, improves model performance as the model is optimized for the given implementation environment. We illustrate the relevance of this constrained optimization of DM models on a direct-marketing case, i.e. in the field of customer relationship management. We optimize an individual-level response model for specific mailing depths (i.e. the percentage of customers of the house list that actually receives a mail given the mailing budget constraint) and compare its predictive performance with that of a traditional response model, neglecting the mailing depth during estimation. The results are in favor of the constrained-optimization approach.
Related Topics
Physical Sciences and Engineering Computer Science Artificial Intelligence
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