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The Integrated Size and Price Optimization Problem

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  • Miriam Kie{ss}ling
  • Sascha Kurz
  • Jorg Rambau

Abstract

We present the Integrated Size and Price Optimization Problem (ISPO) for a fashion discounter with many branches. Based on a two-stage stochastic programming model with recourse, we develop an exact algorithm and a production-compliant heuristic that produces small optimality gaps. In a field study we show that a distribution of supply over branches and sizes based on ISPO solutions is significantly better than a one-stage optimization of the distribution ignoring the possibility of optimal pricing.

Suggested Citation

  • Miriam Kie{ss}ling & Sascha Kurz & Jorg Rambau, 2014. "The Integrated Size and Price Optimization Problem," Papers 1401.8142, arXiv.org.
    • Handle: RePEc:arx:papers:1401.8142
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    References listed on IDEAS

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