Abstract
Designing and pricing single products or product lines is one of the most important problem areas of a firm. In this contribution, a new conjoint-based optimal product line design model with special focus on profit maximizing firms is presented. The model allows the inclusion of consumers’ preferences, counterpart products of competitors as well as variable and fixed costs. Moreover, flexible probabilistic choice modeling is supported using the conditional multinomial logit model. A genetic algorithm is proposed for solving the product line design problem and, as a result of performance evaluation, is proved to be a promising solution technique. In particular, the performance of the genetic algorithm is compared with Green and Krieger’s well-known greedy heuristic which has received much application to realworld product line problems.
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