The MultiNomiX.lng Model

Assortment planning/ Consumer Choice

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Assortment planning/ Consumer Choice with customers ( MultiNomi.lng).
who have a Multinomial Logit(MNL) preferece function.
A vendor must decide which products to carry, taking into account
how customers will choose among the available products.
It costs money to introduce lots of products so
given consumer preferences, product profitability,
and cost of carrying each product,
which set of products should the vendor offer?
Each consumer market segment, s, has a size, NUM( s), which is an upper
limit on the total unit sales to that segment.
Each customer segment s has a relative preference
RP( s, p), for buying product type p.
The base choice of buying nothing has a preference 1.
The MNL model assumes the probability of consumer of type s buying
product p, among the available products, is
proportional to RP( s, p). E.g., if the vendor carries only product p,
then the unit sales to segment s will be
NUM( s)* RP( s, p)/(1+ RP( s, p));


Marketing | Assortment Planning | Consumer Choice | Multinomial Logit | Demand Substitution |