Constrained Assortment Optimization for the Nested Logit Model

Constrained Assortment Optimization for the Nested Logit Model

We study assortment optimization problems where customer choices are governed by the nested logit model and there are constraints on the set of products offered in each nest. Under the nested logit model, the products are organized in nests. Each product in each nest has a fixed revenue associated with it. The goal is to find a feasible set of products, i.e. a feasible assortment, to maximize t...

Online Supplement Constrained Assortment Optimization for the Nested Logit Model

Assortment Optimization Under Variants of the Nested Logit Model

We study a class of assortment optimization problems where customers choose among the offered products according to the nested logit model. There is a fixed revenue associated with each product. The objective is to find an assortment of products to offer so as to maximize the expected revenue per customer. We show that the problem is polynomially solvable when the nest dissimilarity parameters ...

Technical Note: A Simple Greedy Algorithm for Assortment Optimization in the Two-Level Nested Logit Model

We consider the assortment optimization problem under the classical two-level nested logit model. We establish a necessary and sufficient condition for the optimal assortment, and use this optimality condition to develop a simple greedy algorithm that iteratively removes at most one product from each nest, until the optimality condition is satisfied. Our algorithm also exploits the beautiful “l...

The d-Level Nested Logit Model: Assortment and Price Optimization Problems

We consider assortment and price optimization problems under the d-level nested logit model. In the assortment optimization problem, the goal is to find the revenue-maximizing assortment of products to offer, when the prices of the products are fixed. Using a novel formulation of the d-level nested logit model as a tree of depth d, we provide an efficient algorithm to find the optimal assortmen...