A combinatorial algorithm for constrained assortment optimization under nested logit model

Abstract: We consider the assortment optimization problem with disjoint-cardinality constraints under two-level nested logit model. To solve this problem, we first identify a candidate set with $O(mn^2)$ assortments and show that at least one optimal assortment is included in this set. Based on this observation, a fast algorithm, which runs in $O(m n^2 \log mn)$ time, is proposed to find an optimal assortment.