Journal
OPERATIONS RESEARCH LETTERS
Volume 47, Issue 1, Pages 30-35Publisher
ELSEVIER
DOI: 10.1016/j.orl.2018.11.006
Keywords
Assortment optimization; Price optimization; Multilevel nested logit model
Categories
Funding
- Natural Science Foundation of China [71622006, 71761137003]
- Center for Data-Centric Management in the Department of Industrial Engineering at Tsinghua University
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We study the capacitated assortment and price optimization problem under the multilevel nested logit model, where the retailer needs to determine the revenue-maximizing subset of products and their prices within a capacity limit. Customers' purchase behavior is modeled using the multilevel nested logit model, which includes the multinomial logit and the two-level nested toga models as special cases. We formulate this problem as a non-linear mixed integer program and develop an efficient algorithm that finds its 6-approximate solution. (C) 2018 Published by Elsevier B.V.
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