A new model and solution method for product line design with pricing

L S Thakur (), S K Nair, Wen K-W and P Tarasewich
Additional contact information
L S Thakur: University of Connecticut
S K Nair: University of Connecticut
Wen K-W: University of Milwaukee
P Tarasewich: University of Maine

Journal of the Operational Research Society, 2000, vol. 51, issue 1, 90-101

Abstract: Abstract Existing customer preference based product design models do not consider product prices and consumer budgets. These models assume that a purchase is based only on the satisfaction obtained from the product, irrespective of the product price and customer budget. However, when products are expensive relative to buyers' budgets, the effect of prices and budgets must be considered in addition to customer satisfaction. Most current models, moreover, assume that a low preference for one product characteristic is compensated by high preference for another, which may not hold for unacceptable levels of characteristics. For such products, we incorporate prices, budget constraints, and minimum acceptable thresholds in our model. To solve the model we develop a highly accurate, robust and efficient Beam Search (BS) based heuristic that identifies optimal or near optimal product lines. The heuristic is tested on 300 simulated problems and an application. It is also compared to a Genetic Algorithms (GA) based heuristic. We found that our heuristic worked better than the GA heuristic in identifying optimal and near optimal solutions quickly. We also give detailed examples that illustrate the heuristic and demonstrate a pricing analysis application of the model.

Keywords: product design; modeling; combinatorial analysis; heuristics (search for similar items in EconPapers)
Date: 2000
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://link.springer.com/10.1057/palgrave.jors.2600850 Abstract (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pal:jorsoc:v:51:y:2000:i:1:d:10.1057_palgrave.jors.2600850

Ordering information: This journal article can be ordered from
http://www.springer. ... search/journal/41274

DOI: 10.1057/palgrave.jors.2600850

Access Statistics for this article

Journal of the Operational Research Society is currently edited by Tom Archibald and Jonathan Crook

More articles in Journal of the Operational Research Society from Palgrave Macmillan, The OR Society
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().