An Algorithm for Determining Optimal Sales Commissions

By John U. FarleyCharles B. Weinberg
1974| Working Paper No. 199

Relatively simple experimental data which embody a salesman’s assessment of relationships between his efforts and sales are used in a computational algorithm to determine the parameters of a functional relationship between sales volume and sales time spent on products in the line. These time-effectiveness fractions can be aggregated over salesmen in global optimization, in developing commission rates consistent with other marketing plans or in conjunction with more detailed computer-based sales planning andcontrol models. The procedure can also be extended to deal with errors in the input data.