Multi-location assortment optimization under lead time effects
Author(s)
Advisor
Date
2018-08Publisher
Bilkent University
Language
English
Type
ThesisItem Usage Stats
235
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Abstract
We have investigated the assortment planning problem for an online retailer that
has multiple ful llment centers to maximize its expected pro t. Each ful llment
center is responsible for a customer segment which has its own customer pro le,
and each customer segment's demand is governed by a multinomial logit model
(MNL), resulting in a mixtures of MNL (MMNL) model. A demand is primarily
met by the responsible ful llment center, if available. However, if a product is
not available in the responsible ful llment center, the demand can be met by
ful llment centers in other regions at an additional shipping cost paid by the
rm. The shipping cost depends on the distance between regions, so it varies by
origin and destination. We assume that each customer has access to the entire
assortment in all ful llment centers. To solve this problem, di erent from the
literature, we have formulated the problem using a conic quadratic mixed integer
programming approach. Later, the conic formulation is strengthened with valid
inequalities. We have provided a numerical study to test the performance of our
formulation against other formulations. Results show that our conic formulation
together with the valid inequalities delivers outstanding performance compared
to others in the literature. We also validated our approach using data from a
local chain that operates in Northwestern part of Turkey.
Keywords
Online RetailingMulti-Location Assortment Optimization
MMNL Model
Conic İnteger Programming