Paper Info
Title
Large-Scale Price Optimization via Network Flow.
Abstract
This paper deals with price optimization, which is to find the best pricing strategy that maximizes revenue or profit, on the basis of demand forecasting models. Though recent advances in regression technologies have made it possible to reveal price-demand relationship of a large number of products, most existing price optimization methods, such as mixed integer programming formulation, cannot handle tens or hundreds of products because of their high computational costs. To cope with this problem, this paper proposes a novel approach based on network flow algorithms. We reveal a connection between supermodularity of the revenue and cross elasticity of demand. On the basis of this connection, we propose an efficient algorithm that employs network flow algorithms. The proposed algorithm can handle hundreds or thousands of products, and returns an exact optimal solution under an assumption regarding cross elasticity of demand. Even if the assumption does not hold, the proposed algorithm can efficiently find approximate solutions as good as other state-of-the-art methods, as empirical results show.
Year
Venue
Field
2016
ADVANCES IN NEURAL INFORMATION PROCESSING SYSTEMS 29 (NIPS 2016)
Flow network,Revenue,Mathematical optimization,Cross elasticity of demand,Regression,Demand forecasting,Computer science,Integer programming,Artificial intelligence,Price optimization,Machine learning,Network flow algorithms
DocType
Volume
ISSN
Conference
29
1049-5258
Citations 
PageRank 
References 
0
0.34
0
Authors
2
Name
Order
Citations
PageRank
Shinji Ito186.26
Ryohei Fujimaki219316.93