A company is considering an assortment problem of the following 10 products with zero incremental cost....

 

Transcribed Image Text:

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 μ 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}. 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 μ 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}.

Answer rating: 100% (QA)

Let me show the stepbystep workings a Finding the optimal assortment 1 Calculate individual pr... View the full answer