Jointly assorting, Pricing and allocating Space in a Multiple Brands Retail store with Markovian Demand

This paper proposes a single period mixed integer nonlinear programming model to make integrated decision on assorting, pricing and allocating space in a multiple brands retail store. We apply a Poisson demand distribution for any brand such that its rate is a function of some exogenous factors using a discrete time markov chain and two endogenous factors, namely price and allocated space. We assume that neither excess demands nor excess stocks are moved to the next period. The objective function is average total profit. Assorted brands, and their prices, order quantities and allocated spaces are considered as key decision variables. We Force certain constraints on assortment process to take customer requirements into account. Because providing the transition probability matrix for different demand states as a key input to model is difficult, we propose a hidden markov chain method to determine transition probabilities. Finally we solve the model using LINGO software and provide computational results.

کلیدواژه ها:

Markovian demand ، Assortment ، Pricing ، Space allocation ، Hidden Markov chain