A robust approach to the share-of-choice product design problem
A critical issue when solving the share-of-choice product design problem is the reliability of the optimal solution in the presence of partworth uncertainty. Existing approaches use point estimates of an individual's partworth utilities as input to the product optimization stage, ignoring within-person variability in estimates. Post-optimality sensitivity analysis is occasionally performed to assess the degree to which a solution is negatively impacted by partworth uncertainty. We propose a robust optimization model that explicitly captures variation in partworth estimates during the optimization process. Using a large, commercial dataset, we benchmark our model's performance against its deterministic counterpart. We also present inferential theory to guide the selection of model parameters controlled by the analyst. Results reveal that the new approach produces robust solutions in the face of measurement error. Out-of-sample coverage for individuals drawn from the target population is significantly higher than corresponding solutions from published methods.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 40 (2012)
Issue (Month): 6 ()
|Contact details of provider:|| Web page: http://www.elsevier.com/wps/find/journaldescription.cws_home/375/description#description|
|Order Information:|| Postal: http://www.elsevier.com/wps/find/supportfaq.cws_home/regional|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Xinfang (Jocelyn) Wang & Jeffrey D. Camm & David J. Curry, 2009. "A Branch-and-Price Approach to the Share-of-Choice Product Line Design Problem," Management Science, INFORMS, vol. 55(10), pages 1718-1728, October.
- Peter E. Rossi & Greg M. Allenby, 2003. "Bayesian Statistics and Marketing," Marketing Science, INFORMS, vol. 22(3), pages 304-328, July.
- P. V. (Sundar) Balakrishnan & Varghese S. Jacob, 1996. "Genetic Algorithms for Product Design," Management Science, INFORMS, vol. 42(8), pages 1105-1117, August.
- Sandeep R. Chandukala & Yancy D. Edwards & Greg M. Allenby, 2011. "Identifying Unmet Demand," Marketing Science, INFORMS, vol. 30(1), pages 61-73, 01-02.
- Rajeev Kohli & Ramesh Krishnamurti, 1987. "A Heuristic Approach to Product Design," Management Science, INFORMS, vol. 33(12), pages 1523-1533, December.
- Suresh K. Nair & Lakshman S. Thakur & Kuang-Wei Wen, 1995. "Near Optimal Solutions for Product Line Design and Selection: Beam Search Heuristics," Management Science, INFORMS, vol. 41(5), pages 767-785, May.
- Alexandre Belloni & Robert Freund & Matthew Selove & Duncan Simester, 2008. "Optimizing Product Line Designs: Efficient Methods and Comparisons," Management Science, INFORMS, vol. 54(9), pages 1544-1552, September.
- Leyuan Shi & Sigurdur Ólafsson & Qun Chen, 2001. "An Optimization Framework for Product Design," Management Science, INFORMS, vol. 47(12), pages 1681-1692, December.
- Rajeev Kohli & R. Sukumar, 1990. "Heuristics for Product-Line Design Using Conjoint Analysis," Management Science, INFORMS, vol. 36(12), pages 1464-1478, December.
- Peter J. Lenk & Wayne S. DeSarbo & Paul E. Green & Martin R. Young, 1996. "Hierarchical Bayes Conjoint Analysis: Recovery of Partworth Heterogeneity from Reduced Experimental Designs," Marketing Science, INFORMS, vol. 15(2), pages 173-191.
- Jeffrey D. Camm & James J. Cochran & David J. Curry & Sriram Kannan, 2006. "Conjoint Optimization: An Exact Branch-and-Bound Algorithm for the Share-of-Choice Problem," Management Science, INFORMS, vol. 52(3), pages 435-447, March.
When requesting a correction, please mention this item's handle: RePEc:eee:jomega:v:40:y:2012:i:6:p:818-826. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dana Niculescu)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.