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Assortment Optimization under Unknown MultiNomial Logit Choice Models

Abstract · Apr 1, 2017 02:37 ·

cs-lg

Arxiv Abstract

  • Wang Chi Cheung
  • David Simchi-Levi

Motivated by e-commerce, we study the online assortment optimization problem. The seller offers an assortment, i.e. a subset of products, to each arriving customer, who then purchases one or no product from her offered assortment. A customer’s purchase decision is governed by the underlying MultiNomial Logit (MNL) choice model. The seller aims to maximize the total revenue in a finite sales horizon, subject to resource constraints and uncertainty in the MNL choice model. We first propose an efficient online policy which incurs a regret $\tilde{O}(T^{23})$, where $T$ is the number of customers in the sales horizon. Then, we propose a UCB policy that achieves a regret $\tilde{O}(T^{12})$. Both regret bounds are sublinear in the number of assortments.

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