Assortment optimisation under a general discrete choice model: A tight analysis of revenue-ordered assortments

Abstract

e assortment problem in revenue management is the problem of deciding which subset of products to o.er to consumers in order to maximise revenue. A simple and natural strategy is to select the best assortment out of all those that are constructed by fixing a threshold revenue π and then choosing all products with revenue at least π. .is is known as the revenue-ordered assortments strategy. Our €rst contribution is an analysis of the performance of the revenue-ordered assortments strategy making only minimal assumptions about the underlying discrete choice model: We assume that consumers behave rationally, in the sense that the probability of choosing a speci€c product x 2 S when given a choi..