COSTA: contribution optimizing sales territory alignment

The alignment of sales territories has a considerable impact on profit and represents a major problem in salesforce management. Practitioners usually apply the balancing approach. This approach balances territories as well as possible with respect to one or more attributes such as potential or workload. Unfortunately, this approach does not necessarily guarantee maximizing profit contribution. Thus, it does not provide an evaluation of the profit implications of an alignment proposal in comparison with the existing one. In consequence, several authors proposed nonlinear integer optimization models in the 1970s. These models attempted to maximize profit directly by considering the problems of allocating selling time (calling plus travel time) across accounts as well as of assigning accounts to territories simultaneously. However, these models turned out to be too complex to be solvable. Therefore, the authors have either approximated the problem or proposed the application of heuristic solution procedures on the basis of the suboptimal principle of equat ing marginal profit of selling time across territories.