Customer Value Using Recency Frequency

This model is for a company that mails its catalog to a customer every quarter. For each customer, the company keeps track of the recency (the number of catalogs since the customer last purchased) and frequency (the total number of purchases so far). It costs $1 to mail a catalog. If the customer makes a purchase, the company's profit (not counting the cost of mailing the catalog) is Pert distributed with given parameters. The company keeps mailing catalogs to a customer until 24 catalogs produce no purchases, that is, until recency reaches 24.

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