Retail store location and pricing within a competitive environment using constrained multinomial logit

Gabriel Zambrano-Rey, Héctor López-Ospina, Juan Pérez

Research output: Contribution to journalArticlepeer-review

8 Scopus citations

Abstract

The purpose of this paper is to report a pricing and retail location model using the constrained multinomial logit (CMNL), which takes into account customers’ utility and maximum willingness to pay via cut-off soft-constraints. The proposed model is probabilistic and non-linear, therefore a PSO metaheuristic approach was designed to determine the most suitable price, store locations and demand segmentation. The results obtained in test-cases showed a close relationship between price and location decisions. In addition, the results suggest that not only price, but also location decisions are affected when the consumers’ maximum willingness to pay is considered.

Original languageEnglish
Pages (from-to)521-534
Number of pages14
JournalApplied Mathematical Modelling
Volume75
DOIs
StatePublished - Nov 2019

Bibliographical note

Funding Information:
The corresponding author was supported by CONICYT-FONDECYT project 11160320.

Publisher Copyright:
© 2019 Elsevier Inc.

Keywords

  • Constrained multinomial logit
  • Consumer choice models
  • Location models
  • Pricing

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