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Tuesday, November 7, 2017 at 4:15pm
In this talk, we consider dynamic assortment optimization problems, where a firm has limited inventories for a number of products and the customers choose among the offered products according to a certain choice model. The goal of the firm is to find a policy to dynamically decide which set of products to offer to each customer to maximize its total expected revenue. One approach for tackling such a problem is based on solving a fluid approximation to estimate the value of a unit of inventory for each product, called the bid-price. In this case, one decides which set of products to offer by solving a myopic problem that maximizes the expected revenue extracted from each customer after adjusting the revenue from each product by its bid-price. We give a performance guarantee for a policy of this form. In particular, we show that a policy of this form is guaranteed to obtain at least half of the optimal total expected revenue. Furthermore, we demonstrate that we can use the standard rollout idea on this policy to further improve its performance. The rollout idea gives rise to capacity-dependent bid-prices, where the bid-price of a product depends on its remaining inventory.
This work is joint with Paat Rusmevichientong from USC and Mika Sumida from Cornell Tech.
Huseyin Topaloglu is a professor in the School of Operations Research and Information Engineering at Cornell Tech. He holds a B.Sc. in Industrial Engineering from Bogazici University in Turkey, and a Ph.D. in Operations Research and Financial Engineering from Princeton University. His research interests include stochastic programming and approximate dynamic programming with applications in transportation logistics, revenue management and supply chain management. His recent work focuses on constructing tractable solution methods for large-scale network revenue management problems and building approximation strategies for retail assortment planning. Huseyin Topaloglu is currently serving as the department editor for the Revenue Management Department at Production and Operations Management and associate editor for Operations Research, Management Science, Naval Research Logistics, Transportation Science, Mathematical Programming Computation and IIE Transactions.