Optimizing Product Portfolios with Discrete Choice Models

Rausch M., Kurz P., Binner S., 2025 – Sawtooth Research Conference – USA 2025

How do we optimize a product portfolio using discrete choice modeling?

A two-stage approach is presented: First, use algorithms like simulated annealing to find near-optimal portfolios; second, refine these solutions by testing all possible remaining SKU combinations.

This method balances mathematical optimization with real-world constraints, providing a practical, adaptable solution for both simple and complex market situations, and delivering actionable insights for business strategy optimization.