The Assortment Problem with Probabilistic Demands

Abstract

The early work done on the assortment problem assumed known demands and additive and proportional substitution cost functions for single period problems. The extension of this problem (to consider probabilistic demands and multiple periods) complicates the problem considerably. By making some assumptions about the pattern of demands and the form of a reasonable solution, the problem can be approached by using dynamic programming thus finding the shortest route through a network.