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MFRM may overestimate demand for expensive products with small availability #16

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sash-ko opened this issue Apr 22, 2017 · 1 comment
Open

MFRM may overestimate demand for expensive products with small availability #16

sash-ko opened this issue Apr 22, 2017 · 1 comment

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@sash-ko
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sash-ko commented Apr 22, 2017 •
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Current implementation of calibrate_no_booking uses following formula to calculate weights of products with no observed demand:

Wi = Pi * (1 - Ai)

where Pi is a probability of a customer selecting a product i, Ai is availability of the product i.

This formula penalizes products with high availability and small probability but it favours products with small availability even if their probability is low. For example, let P1 = 0.5, A1 = 0.9, P2 = 0.1 and A2 = 0, in this case W1 = 0.05 and W2 = 0.1. This means that product 2 demand will be higher than product 1 demand even the probability of this product being selected by a customer is much smaller than probability of the product 1.
@sash-ko sash-ko changed the title MFRM may overestimate demand for expensive products in zero availability MFRM may overestimate demand for expensive products with small availability Apr 22, 2017
@sash-ko
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sash-ko commented Apr 22, 2017

Can be due to #17

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