James Davis; Customer Choice Models and Assortment Optimization

Tuesday, January 12, 2016, 4:00 pm
SIG 226

James Davis , University of Illinois at Urbana-Champaign .
Customer Choice Models and Assortment Optimization

Abstract: In this talk we will focus on the assortment optimization problem. In this problem there is a set of products, each of which gives some fixed revenue when it is purchased by a customer. There is also a set of customers who’s purchasing behavior is influenced by what products they view. Our objective is to select some subset of products to display to customers in order to maximize expected revenue. The key component in this problem is customer purchasing behavior which we describe with a customer choice model. We will introduce a variety of customer choice models, each of which presents unique challenges. Under one of these models, the multinomial logit model, we will solve variants of the assortment optimization problem.