American Institute of Mathematical Sciences

2012, 2(4): 669-693. doi: 10.3934/naco.2012.2.669

The integrated size and price optimization problem

 1 Universität Bayreuth, 95440 Bayreuth, Germany 2 Universität Bayreuth, 95440 Bayreuth, Germany, Germany

Received  December 2011 Revised  October 2012 Published  November 2012

We present the Integrated Size and Price Optimization Problem (ISPO) for a fashion discounter with many branches. Based on a two-stage stochastic programming model with recourse, we develop an exact algorithm and a production-compliant heuristic that produces small optimality gaps. In a field study we show that a distribution of supply over branches and sizes based on ISPO solutions is significantly better than a one-stage optimization of the distribution ignoring the possibility of optimal pricing.
Citation: Miriam Kiessling, Sascha Kurz, Jörg Rambau. The integrated size and price optimization problem. Numerical Algebra, Control & Optimization, 2012, 2 (4) : 669-693. doi: 10.3934/naco.2012.2.669
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