Fall 2015 Seminar Series

DATE: 10/29/15
LOCATION: E51-315
TIME: 4:15pm
Reception immediately following

SPEAKER:
Huseyin Topaloglu

TITLE
Pricing and Assortment Optimization Under the Markov Chain Choice Model

ABSTRACT
We consider pricing and assortment optimization problems when customers choose under the Markov chain choice model. Under this choice model, a customer arrives into the system to purchase a certain product. If this product is available, then based on the price of the product, the customer decides whether she purchases this product. If the customer does not purchase the product, then she transitions to another product or to the no-purchase option according to a certain transition probability matrix. In this way, the customer transitions between the products until she purchases a product or transitions to the no-purchase option and leaves the system without a purchase. We consider joint pricing and assortment optimization, single-resource revenue management and network revenue management problems when customers choose under this choice model. We show how to solve the corresponding optimization problems tractably, characterize the structure of the optimal policy and develop tractable approximations for large-scale problems. This talk is based on joint work with James Dong and Jacob Feldman.