We present the Integrated Size and Price Optimization Problem (ISPO) for a fashion discounter with many branches. Based on a two-stage stochastic programming model with recourse, we develop an exact algorithm and a production-compliant heuristic that produces small optimality gaps. In a field study we show that a distribution of supply over branches and sizes based on ISPO solutions is significantly better than a one-stage optimization of the distribution ignoring the possibility of optimal pricing.
@article{arxiv.1401.8142,
title = {The Integrated Size and Price Optimization Problem},
author = {Miriam Kießling and Sascha Kurz and Jörg Rambau},
journal= {arXiv preprint arXiv:1401.8142},
year = {2014}
}