Mar 27, 2016

New Paper

New paper on the product portfolio planning problem with customer-engineering interaction accepted for publication in Operations Research Letters.
Jiao and Zhang (2005) propose a shared-surplus maximization model considering customer preferences and choice behavior as well as platform-based product costing to tackle the so-called product portfolio planning problem (optimal mix of products and attributes). They emphasize the joined consideration of customers concerns and operational implications and propose a stochastic, mixed-integer, non-linear program. We discuss several issues and ambiguities of the original approach and propose some improvements such as demand model calibration, deterministic customer surplus, and an effective objective function.

Keywords: multinomial logit model, random utility, assortment optimization, product line optimization, mathematical programming