Question
A company is considering an assortment problem of the following 10 products with zero incremental cost. The price is given in the second row.
A company is considering an assortment problem of the following 10 products with zero incremental cost. The price is given in the second row. According to the MNL model, the company has estimated the parameters in the third row. Product i 2 Price Pi 520 Mi 0.4 (a) Based on the MNL model, find the optimal assortment for the firm. 510 0.7 3 470 650 0.45 0.6 5 370 0.63 0.6 7 320 450 0.54 8 220 0.45 (b) Based on the arguments in the lecture slides, show that the revenue R (Sk) as a function of k must be increasing first, then decreasing. Recall that S is the revenue ordered assortment containing products {1,2, ..., k}.
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Management Accounting
Authors: Charles T. Horngren, Gary L. Sundem, William O. Stratton, Phillip Beaulieu
6th Canadian edition
013257084X, 1846589207, 978-0132570848
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