Enhancing Value by Optimal Segmentation: Application to Determine Newspaper Zones

We develop a heuristic procedure for partitioning graphs into clusters of nodes such that each cluster of nodes induces a connected subgraph with the objective of minimizing the differences within clusters as measured by the total differences between all pairs of nodes of a cluster. We apply our procedure to determine optimal delivery zones for community sections of a major newspaper while including a number of operational constraints. Our results demonstrate a 18–56% improvement in the total differences within the zones designed over the usual intuitive heuristics. Given the magnitude of the revenue generated by larger local newspapers through zoning, our method demonstrates how better zoning can significantly enhance the value of segmentation.