Product Assortment Competition with the Decoy Effect

The fraction of customers who choose a particular item from among a set of available items can be increased significantly by the inclusion of a related inferior (and apparently irrelevant) item in the choice set. This violation of the independence from irrelevant alternatives and the regularity properties is called the decoy effect, dominance effect, or … Read more

Multiperiod Multiproduct Advertising Budgeting: Stochastic Optimization Modeling

We propose a stochastic optimization model for the Multiperiod Multiproduct Advertising Budgeting problem, so that the expected profit of the advertising investment is maximized. The model is a convex optimization problem that can readily be solved by plain use of standard optimization software. It has been tested for planning a realistic advertising campaign. In our … Read more

A new mixed integer linear programming formulation for one problem of exploration of online social networks

Enormous global popularity of online social network sites has initiated numerous studies and methods investigating different aspects of their use, so some concepts from network-based studies in optimization theory can be used for research into online networks. In Gaji\’c (2014) are given a several new mixed integer linear programming formulations for first and second problem … Read more

Pricing to accelerate demand learning in dynamic assortment planning for perishable products

Retailers, from fashion stores to grocery stores, have to decide what range of products to off er, i.e., their product assortment. New business trends, such as mass customization and shorter product life cycles, make predicting demand more difficult, which in turn complicates assortment planning. We propose and study a stochastic dynamic programming model for simultaneously making … Read more

A Piecewise Linearization Framework for Retail Shelf Space Management Models

Managing shelf space is critical for retailers to attract customers and to optimize profit. This paper develops a shelf space allocation optimization model that explicitly incorporates essential in-store costs and considers space- and cross-elasticities. The resultant model maximizes a signomial objective function over linear and bilinear constraints in mixed-integer variables. We propose a piecewise linearization … Read more