IDEAS home Printed from https://ideas.repec.org/a/inm/ormnsc/v54y2008i9p1544-1552.html
   My bibliography  Save this article

Optimizing Product Line Designs: Efficient Methods and Comparisons

Author

Listed:
  • Alexandre Belloni

    (The Fuqua School of Business, Duke University, Durham, North Carolina 27708)

  • Robert Freund

    (MIT Sloan School of Management, Massachusetts Institute of Technology, Cambridge, Massachusetts 02142)

  • Matthew Selove

    (MIT Sloan School of Management, Massachusetts Institute of Technology, Cambridge, Massachusetts 02142)

  • Duncan Simester

    (MIT Sloan School of Management, Massachusetts Institute of Technology, Cambridge, Massachusetts 02142)

Abstract

We take advantage of recent advances in optimization methods and computer hardware to identify globally optimal solutions of product line design problems that are too large for complete enumeration. We then use this guarantee of global optimality to benchmark the performance of more practical heuristic methods. We use two sources of data: (1) a conjoint study previously conducted for a real product line design problem, and (2) simulated problems of various sizes. For both data sources, several of the heuristic methods consistently find optimal or near-optimal solutions, including simulated annealing, divide-and-conquer, product-swapping, and genetic algorithms.

Suggested Citation

  • 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.
    • Handle: RePEc:inm:ormnsc:v:54:y:2008:i:9:p:1544-1552
    DOI: 10.1287/mnsc.1080.0864
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1287/mnsc.1080.0864
    Download Restriction: no
    File URL: https://libkey.io/10.1287/mnsc.1080.0864?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Gregory Dobson & Shlomo Kalish, 1988. "Positioning and Pricing a Product Line," Marketing Science, INFORMS, vol. 7(2), pages 107-125.
    2. Olivier Toubia & Duncan I. Simester & John R. Hauser & Ely Dahan, 2003. "Fast Polyhedral Adaptive Conjoint Estimation," Marketing Science, INFORMS, vol. 22(3), pages 273-303.
    3. P. V. (Sundar) Balakrishnan & Varghese S. Jacob, 1996. "Genetic Algorithms for Product Design," Management Science, INFORMS, vol. 42(8), pages 1105-1117, August.
    4. Kohli, Rajeev & Krishnamurti, Ramesh, 1989. "Optimal product design using conjoint analysis: Computational complexity and algorithms," European Journal of Operational Research, Elsevier, vol. 40(2), pages 186-195, May.
    5. Paul E. Green & Abba M. Krieger, 1985. "Models and Heuristics for Product Line Selection," Marketing Science, INFORMS, vol. 4(1), pages 1-19.
    6. Rajeev Kohli & Ramesh Krishnamurti, 1987. "A Heuristic Approach to Product Design," Management Science, INFORMS, vol. 33(12), pages 1523-1533, December.
    7. Richard D. McBride & Fred S. Zufryden, 1988. "An Integer Programming Approach to the Optimal Product Line Selection Problem," Marketing Science, INFORMS, vol. 7(2), pages 126-140.
    8. 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.
    9. Alexouda, Georgia & Paparrizos, Konstantinos, 2001. "A genetic algorithm approach to the product line design problem using the seller's return criterion: An extensive comparative computational study," European Journal of Operational Research, Elsevier, vol. 134(1), pages 165-178, October.
    10. Leyuan Shi & Sigurdur Ólafsson & Qun Chen, 2001. "An Optimization Framework for Product Design," Management Science, INFORMS, vol. 47(12), pages 1681-1692, December.
    11. Rajeev Kohli & R. Sukumar, 1990. "Heuristics for Product-Line Design Using Conjoint Analysis," Management Science, INFORMS, vol. 36(12), pages 1464-1478, December.
    12. Leyuan Shi & Sigurdur Ólafsson, 2000. "Nested Partitions Method for Global Optimization," Operations Research, INFORMS, vol. 48(3), pages 390-407, June.
    13. 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.
    14. Gregory Dobson & Shlomo Kalish, 1993. "Heuristics for Pricing and Positioning a Product-Line Using Conjoint and Cost Data," Management Science, INFORMS, vol. 39(2), pages 160-175, February.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. 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.
    2. G. E. Fruchter & A. Fligler & R. S. Winer, 2006. "Optimal Product Line Design: Genetic Algorithm Approach to Mitigate Cannibalization," Journal of Optimization Theory and Applications, Springer, vol. 131(2), pages 227-244, November.
    3. Tan Wang & Genaro Gutierrez, 2022. "Robust Product Line Design by Protecting the Downside While Minding the Upside," Production and Operations Management, Production and Operations Management Society, vol. 31(1), pages 194-217, January.
    4. Albritton, M. David & McMullen, Patrick R., 2007. "Optimal product design using a colony of virtual ants," European Journal of Operational Research, Elsevier, vol. 176(1), pages 498-520, January.
    5. Winfried J. Steiner & Harald Hruschka, 2002. "Produktliniengestaltung mit Genetischen Algorithmen," Schmalenbach Journal of Business Research, Springer, vol. 54(7), pages 575-601, November.
    6. Winfried Steiner & Harald Hruschka, 2002. "A Probabilistic One-Step Approach to the Optimal Product Line Design Problem Using Conjoint and Cost Data," Review of Marketing Science Working Papers 1-4-1003, Berkeley Electronic Press.
    7. 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.
    8. Daria Dzyabura & Srikanth Jagabathula, 2018. "Offline Assortment Optimization in the Presence of an Online Channel," Management Science, INFORMS, vol. 64(6), pages 2767-2786, June.
    9. Dimitris Bertsimas & Velibor V. Mišić, 2019. "Exact First-Choice Product Line Optimization," Operations Research, INFORMS, vol. 67(3), pages 651-670, May.
    10. Alexouda, Georgia & Paparrizos, Konstantinos, 2001. "A genetic algorithm approach to the product line design problem using the seller's return criterion: An extensive comparative computational study," European Journal of Operational Research, Elsevier, vol. 134(1), pages 165-178, October.
    11. Maoqi Liu & Li Zheng & Changchun Liu & Zhi‐Hai Zhang, 2023. "From share of choice to buyers' welfare maximization: Bridging the gap through distributionally robust optimization," Production and Operations Management, Production and Operations Management Society, vol. 32(4), pages 1205-1222, April.
    12. Tsafarakis, Stelios & Zervoudakis, Konstantinos & Andronikidis, Andreas & Altsitsiadis, Efthymios, 2020. "Fuzzy self-tuning differential evolution for optimal product line design," European Journal of Operational Research, Elsevier, vol. 287(3), pages 1161-1169.
    13. Baier, Daniel & Gaul, Wolfgang, 1998. "Optimal product positioning based on paired comparison data," Journal of Econometrics, Elsevier, vol. 89(1-2), pages 365-392, November.
    14. Leyuan Shi & Sigurdur Ólafsson & Qun Chen, 2001. "An Optimization Framework for Product Design," Management Science, INFORMS, vol. 47(12), pages 1681-1692, December.
    15. Wilhelm, Wilbert E. & Xu, Kaihong, 2002. "Prescribing product upgrades, prices and production levels over time in a stochastic environment," European Journal of Operational Research, Elsevier, vol. 138(3), pages 601-621, May.
    16. Day, Jamison M. & Venkataramanan, M.A., 2006. "Profitability in product line pricing and composition with manufacturing commonalities," European Journal of Operational Research, Elsevier, vol. 175(3), pages 1782-1797, December.
    17. Dimitris Bertsimas & Velibor V. Mišić, 2017. "Robust Product Line Design," Operations Research, INFORMS, vol. 65(1), pages 19-37, February.
    18. Stelios Tsafarakis, 2016. "Redesigning product lines in a period of economic crisis: a hybrid simulated annealing algorithm with crossover," Annals of Operations Research, Springer, vol. 247(2), pages 617-633, December.
    19. Tallys H. Yunes & Dominic Napolitano & Alan Scheller-Wolf & Sridhar Tayur, 2007. "Building Efficient Product Portfolios at John Deere and Company," Operations Research, INFORMS, vol. 55(4), pages 615-629, August.
    20. Pantourakis, Michail & Tsafarakis, Stelios & Zervoudakis, Konstantinos & Altsitsiadis, Efthymios & Andronikidis, Andreas & Ntamadaki, Vasiliki, 2022. "Clonal selection algorithms for optimal product line design: A comparative study," European Journal of Operational Research, Elsevier, vol. 298(2), pages 585-595.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:inm:ormnsc:v:54:y:2008:i:9:p:1544-1552. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Asher (email available below). General contact details of provider: https://edirc.repec.org/data/inforea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.