Catalog Segmentation by Implementing Fuzzy Clustering and Mathematical Programming Model

Abstract

This work is concerned with the fuzzy clustering problem of different products in j variant catalogs, each of size i products that maximize customer satisfaction level in customer relationship management. The satisfaction degree of each customer is defined as a function of his/her needed product number that exists in catalog and also his/her priority. To determine the priority level of each customer, firstly customers are divided to three clusters with high, medium and low importance based on his/her needed products list. Then, all customers have been ranked based on their membership level in each of the above three clusters. In this paper in order to cluster customers, fuzzy c-means algorithm is applied. The proposed problem is firstly modeled as a bi-objective mathematical programming model. The objective functions of the model are to maximize the number of covered customers and overall satisfaction level results of delivering service. Then, this model is changed to a single integer linear programming model by applying fuzzy theory concepts. Finally, the efficiency of the proposed solution procedure is verified by using a numerical example.