Capacitated assortment and price optimization under the multinomial logit model. (English) Zbl 1258.91068
Summary: We consider an assortment and price optimization problem where a retailer chooses an assortment of competing products and determines their prices to maximize the total expected profit subject to a capacity constraint. Customers’ purchase behavior follows the multinomial logit choice model with general utility functions. This paper simplifies it to a problem of finding a unique fixed point of a single-dimensional function and visualizes the assortment optimization process. An efficient algorithm to find the optimal assortment and prices is provided.
Keywords:
multinomial logit model; assortment optimization; multi-product price optimization; efficient assortmentReferences:
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