Tuesday, 13:45 - 14:10 h, Room: MA 376

 

Miriam Kießling
ISPO – Integrated size and price optimization for a fashion discounter with many branches

Coauthors: Sascha Kurz, Jörg Rambau

 

Abstract:
We present the integrated size and price optimization problem (ISPO)
for a fashion discounter with many branches.
Branches are supplied by pre-packaged bundles consisting of items of
different size and number - so-called lot-types. Our goal is to find a
revenue-maximizing supply strategy.
Based on a two-stage stochastic programming model including the effect of markdowns as recourse, we developed an exact branch-and-bound
algorithm where dual bounds are obtained by combinatorial bounds
combined with LP-relaxations. For practical purposes we developed a
production-compliant heuristic, the so-called ping-pong-heuristic, that uses
the special structure of the problem by alternately solving price and size
optimization. In all tested cases we obtain very small optimality gaps
(< 0.03,%).
In a field study we show that a distribution of supply over branches
and sizes based on ISPO solutions leads to better results in terms of realized return than a one-stage
optimization of the distribution ignoring the possibility of optimal pricing.

 

Talk 2 of the invited session Tue.2.MA 376
"Computational aspects of stochastic integer programming for large-scale and/or real-world problems" [...]
Cluster 22
"Stochastic optimization" [...]

 

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