An efficient method for joint product line selection and pricing with fixed costs

Jungju Park, Jeonghoon Mo

Research output: Contribution to journalArticle

Abstract

In this paper, we propose an exact solution approach to solve a joint product line selection and pricing problem with a fixed cost factor. We adopt the multinomial logit model to estimate the sales of each marketed product, and suppose that the introduction of each product to the market incurs some constant fixed costs. Utilizing an implicit function form of the optimal price, we transform the original problem into the one with the decision variables for the product introduction only. The efficiency of the proposed transformation approach is demonstrated through simulations. We further discuss its applicability to generalized problems.

Original languageEnglish
Pages (from-to)367-378
Number of pages12
JournalOptimization Letters
Volume13
Issue number2
DOIs
Publication statusPublished - 2019 Mar 8

Fingerprint

Pricing
Line
Costs
Multinomial Logit Model
Implicit Function
Exact Solution
Transform
Estimate
Simulation

All Science Journal Classification (ASJC) codes

  • Control and Optimization

Cite this

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An efficient method for joint product line selection and pricing with fixed costs. / Park, Jungju; Mo, Jeonghoon.

In: Optimization Letters, Vol. 13, No. 2, 08.03.2019, p. 367-378.

Research output: Contribution to journalArticle

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