The Integrated Size and Price Optimization Problem

Abstract

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.

26 pages, 9 tables

References in corpus (1)

• An exact column-generation approach for the lot-type design problem

Cited by in corpus (2)

• The Top-Dog Index: A New Measurement for the Demand Consistency of the Size Distribution in Pre-Pack Orders for a Fashion Discounter with Many Small Branches
• An exact column-generation approach for the lot-type design problem