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Wine in Your Knapsack?*

Published online by Cambridge University Press:  08 June 2012

Jon M. Conrad ,
Miguel I. Gómez  and
Alberto J. Lamadrid
Jon M. Conrad
Affiliation:
Charles H. Dyson School of Applied Economics and Management, Cornell University, 455 Warren Hall, Ithaca, NY, 14853, email:[email protected]
Miguel I. Gómez
Affiliation:
Charles H. Dyson School of Applied Economics and Management, Cornell University, 246 Warren Hall, Cornell University, Ithaca, NY, 14853, email:[email protected]
Alberto J. Lamadrid
Affiliation:
Charles H. Dyson School of Applied Economics and Management, Cornell University, 250 Warren Hall, Ithaca, NY, 14853, email: [email protected]
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Abstract

We pose several Knapsack Problems (KPs) to select the optimal subset of wines subject to budget and quantity constraints. The first problem seeks the subset of wines, from a single cultivar (zinfandel) that maximizes the sum of ratings subject to a budget constraint. We modify this problem by adding an equality constraint on the number of bottles that must be chosen. The third problem seeks to maximize the sum of ratings from three different cultivars (cabernet sauvignon, pinot noir, and zinfandel) subject to a budget constraint and then a budget and minimum bottle constraints for each cultivar. The rating maximization problem may have multiple solutions. We also pose two expenditure minimization problems, subject to achieving the maximum sum of ratings. We extend the model by defining an integer choice problem, that allows multiple purchases of the same wine, and by accounting for possible non-linearities between wine ratings and utilities. Applications of this model include procurement decisions for tastings, special events or building a personal wine cellar. (JEL Classification: C61 D12)

Type
Articles
Information
Journal of Wine Economics , Volume 6 , Issue 1 , 2011 , pp. 83 - 110
Copyright
Copyright © American Association of Wine Economists 2011

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References

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