Abstract
Optimizing product lines is the task of planning the joint offer of multiple substitutes concurrently. Actually, this resembles the design of a choice menu where consumers are supposed to choose at most one item from a set of alternatives.
In this paper we model the product line optimization problem by decomposing it into two stages. Product decision is done in the first stage by anticipating possible outcomes of the subsequent (price) stage. This so-called hierarchical decision situation is considered due to uncertainty about consumers’ tastes. Results suggest that substantial increase of expected profit can be drawn from the hierarchical approach.
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Stauß, B., Gaul, W. (2005). Product Line Optimization as a Two Stage Problem. In: Fleuren, H., den Hertog, D., Kort, P. (eds) Operations Research Proceedings 2004. Operations Research Proceedings, vol 2004. Springer, Berlin, Heidelberg. https://doi.org/10.1007/3-540-27679-3_31
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DOI: https://doi.org/10.1007/3-540-27679-3_31
Publisher Name: Springer, Berlin, Heidelberg
Print ISBN: 978-3-540-24274-1
Online ISBN: 978-3-540-27679-1
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