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Generalized Synthetic Control for TestOps at ABI: Models, Algorithms, and Infrastructure

Author

Listed:
  • Luis Costa

    (Operations Research Center, Massachusetts Institute of Technology, Cambridge, Massachusetts 02139)

  • Vivek F. Farias

    (Operations Research Center, Massachusetts Institute of Technology, Cambridge, Massachusetts 02139)

  • Patricio Foncea

    (Operations Research Center, Massachusetts Institute of Technology, Cambridge, Massachusetts 02139)

  • Jingyuan (Donna) Gan

    (Operations Research Center, Massachusetts Institute of Technology, Cambridge, Massachusetts 02139)

  • Ayush Garg

    (Anheuser-Busch InBev, St. Louis, Missouri 63118)

  • Ivo Rosa Montenegro

    (Anheuser-Busch InBev, St. Louis, Missouri 63118)

  • Kumarjit Pathak

    (Anheuser-Busch InBev, St. Louis, Missouri 63118)

  • Tianyi Peng

    (Operations Research Center, Massachusetts Institute of Technology, Cambridge, Massachusetts 02139)

  • Dusan Popovic

    (Anheuser-Busch InBev, St. Louis, Missouri 63118)

Abstract

We describe a novel optimization-based approach—generalized synthetic control (GSC)—in which we learn from experiments conducted in a physical retail environment. GSC solves a long-standing problem of learning from experiments conducted in this environment when treatment effects are small, the environment is extremely noisy and nonstationary, and interference and adherence problems are commonplace. The utilization of GSC has demonstrated a remarkable increase in statistical power, approximately one hundredfold (100×) higher than conventional inferential methods. This innovative approach forms the basis of TestOps, a pioneering large-scale experimentation platform designed specifically for physical retailers. TestOps was developed and has been broadly implemented as part of a collaboration between Anheuser Busch Inbev (ABI) and a team of operations researchers and data engineers from the Massachusetts Institute of Technology. TestOps currently runs physical experiments impacting approximately 135 million USD in revenue every month and routinely identifies innovations that result in a 1%–2% increase in sales volume. The vast majority of these innovations would have remained unidentified had we not developed our novel approach to inference. Prior to our implementation, statistically significant conclusions could be drawn on only ∼6% of all experiments, a fraction that has now increased by 10-fold. Given its success, TestOps is being rolled out globally at ABI, driving significant revenue growth and enabling the extraction of valuable insights from large-scale physical experiments.

Suggested Citation

  • Luis Costa & Vivek F. Farias & Patricio Foncea & Jingyuan (Donna) Gan & Ayush Garg & Ivo Rosa Montenegro & Kumarjit Pathak & Tianyi Peng & Dusan Popovic, 2023. "Generalized Synthetic Control for TestOps at ABI: Models, Algorithms, and Infrastructure," Interfaces, INFORMS, vol. 53(5), pages 336-349, September.
    • Handle: RePEc:inm:orinte:v:53:y:2023:i:5:p:336-349
    DOI: 10.1287/inte.2023.0028
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    References listed on IDEAS

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