Optimal product design using conjoint analysis : Computational complexity and algorithms *

The problem of maximizing the share of a new product introduced in a competitive market is shown to be NP-hard. A directed graph representation of the problem is used to construct shortest-path and dynamic-programming heuristics. Both heuristics are shown to have arbitrarily-bad worst-case bounds. Computat ional experience with real-sized problems is reported. Both heuristics identify near-optimal solutions for the simulated problems, the dynamic-programming heuristic performing better than the shortest-path heuristic.

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