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Article: Dynamic assortment optimization with a multinomial logit choice model and capacity constraint
Title | Dynamic assortment optimization with a multinomial logit choice model and capacity constraint |
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Authors | |
Issue Date | 2010 |
Citation | Operations Research, 2010, v. 58, n. 6, p. 1666-1680 How to Cite? |
Abstract | We consider an assortment optimization problem where a retailer chooses an assortment of products that maximizes the profit subject to a capacity constraint. The demand is represented by a multinomial logit choice model. We consider both the static and dynamic optimization problems. In the static problem, we assume that the parameters of the logit model are known in advance; we then develop a simple algorithm for computing a profit-maximizing assortment based on the geometry of lines in the plane and derive structural properties of the optimal assortment. For the dynamic problem, the parameters of the logit model are unknown and must be estimated from data. By exploiting the structural properties found for the static problem, we develop an adaptive policy that learns the unknown parameters from past data and at the same time optimizes the profit. Numerical experiments based on sales data from an online retailer indicate that our policy performs well. © 2010 INFORMS. |
Persistent Identifier | http://hdl.handle.net/10722/295992 |
ISSN | 2023 Impact Factor: 2.2 2023 SCImago Journal Rankings: 2.848 |
ISI Accession Number ID |
DC Field | Value | Language |
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dc.contributor.author | Rusmevichientong, Paat | - |
dc.contributor.author | Shen, Zuo Jun Max | - |
dc.contributor.author | Shmoys, David B. | - |
dc.date.accessioned | 2021-02-11T04:52:36Z | - |
dc.date.available | 2021-02-11T04:52:36Z | - |
dc.date.issued | 2010 | - |
dc.identifier.citation | Operations Research, 2010, v. 58, n. 6, p. 1666-1680 | - |
dc.identifier.issn | 0030-364X | - |
dc.identifier.uri | http://hdl.handle.net/10722/295992 | - |
dc.description.abstract | We consider an assortment optimization problem where a retailer chooses an assortment of products that maximizes the profit subject to a capacity constraint. The demand is represented by a multinomial logit choice model. We consider both the static and dynamic optimization problems. In the static problem, we assume that the parameters of the logit model are known in advance; we then develop a simple algorithm for computing a profit-maximizing assortment based on the geometry of lines in the plane and derive structural properties of the optimal assortment. For the dynamic problem, the parameters of the logit model are unknown and must be estimated from data. By exploiting the structural properties found for the static problem, we develop an adaptive policy that learns the unknown parameters from past data and at the same time optimizes the profit. Numerical experiments based on sales data from an online retailer indicate that our policy performs well. © 2010 INFORMS. | - |
dc.language | eng | - |
dc.relation.ispartof | Operations Research | - |
dc.title | Dynamic assortment optimization with a multinomial logit choice model and capacity constraint | - |
dc.type | Article | - |
dc.description.nature | link_to_subscribed_fulltext | - |
dc.identifier.doi | 10.1287/opre.1100.0866 | - |
dc.identifier.scopus | eid_2-s2.0-78651451742 | - |
dc.identifier.volume | 58 | - |
dc.identifier.issue | 6 | - |
dc.identifier.spage | 1666 | - |
dc.identifier.epage | 1680 | - |
dc.identifier.eissn | 1526-5463 | - |
dc.identifier.isi | WOS:000285746300010 | - |
dc.identifier.issnl | 0030-364X | - |