We consider the assortment planning problem of a retailer selling quality differentiated
products of a single category to consumers who have heterogeneous preference for quality. The
retailer does not know the type of each consumer but knows the distribution of preference
and how consumers make choice. Consumers observe the quality and prices of the products
in the assortment, and choose a product that maximizes their utility. Due to such consumer
choice each product in the assortment gets a random demand stream and therefore assortment
decision depends on the inventory cost. We find that as compared to deterministic demand,
under stochastic demand, the optimal prices increase and the optimal assortment size reduces,
in order to reduce the effect of inventory costs arising from random demand. Further, while
the retailer offers a wider range of products for such a heterogenous mix of customers, under
special conditions, the optimal assortment offered under demand uncertainty is a subset of that
under deterministic demand.