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1579. A discrete choice model for multi-product pricing based on the Markov Chain Choice Model combined with reservation prices
Invited abstract in session MB-40: Advances in Stochastic Modelling and Applied Probability Ι, stream Advances in Stochastic Modelling and Learning Methods.
Monday, 10:30-12:00Room: 96 (building: 306)
Authors (first author is the speaker)
| 1. | Ivo Adan
|
| 2. | Laura Sprenkels
|
| Department of Industrial Engineering and Innovation Sciences, Eindhoven University of Technology | |
| 3. | Zumbul Atan
|
| Technical University of Eindhoven |
Abstract
A customer choice model, based on the Markov Chain Choice Model with reservation prices, is proposed to solve the problem of finding optimal selling prices for substitutable products. The model includes both customers’ willingness to pay and substitution behavior explicitly, and can handle any type of correlation between products. A discrete version of the model is formulated and solved to optimality. This discrete model is instrumental in a simulation procedure to estimate optimal reservation prices in the original continuous model.
Keywords
- Stochastic Models
Status: accepted
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