A joint optimisation model for inventory replenishment, product assortment, shelf space and display area allocation decisions

Hariga, Moncer; Al-Ahmari, Abdulrahman; Mohamed, Abdel-Rahman A.

doi:10.1016/j.ejor.2006.06.025

Cited by 93 publications

(58 citation statements)

References 10 publications

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“…The difference is that Li (2007) presents a holistic measure-profit rate to estimate profitability of variants (enable the price and cost coefficients to vary across variants) and then make a decision which items should be offered. Agrawal & Smith (2003) and Hariga, Al-Ahmari& Mohamed (2007) study assortment optimization model focusing on retailers' inventory investment decision [11,12], but Agrawal and Smith (2003) set newsboy inventory model to reach a fixed service level for the items that are in the assortment.…”

Section: Inventory and Assortmentmentioning

confidence: 99%

Review on Assortment Problems in Retailing Supply Chain Management

Ji¹,

Liang²

2018

dtssehs

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In this paper, we are aimed at reviewing assortment problems integrating pricing strategies, inventory levels and distribution network planning in retail. Through the literature study, we present a comprehensive and updated review and put forward the future directions for assortment study. The main methodology we used is literature study. We classified related papers and reviewed them by different themes. We find that a great number of existing papers related to assortment problems mostly combine the problem of pricing decision, inventory control and distribution design. However, those papers tend to study two or three points above. In other words, there is no literature studying all points simultaneously. Given our findings, we finally propose that it is innovative and valuable to put efforts to study assortment problems combined with pricing, inventory and distribution decisions.

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Section: Inventory and Assortmentmentioning

confidence: 99%

Review on Assortment Problems in Retailing Supply Chain Management

Ji¹,

Liang²

2018

dtssehs

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“…Tests are limited to instances of up to four items on six shelves. Hariga et al (2007) propose a model that simultaneously optimizes assortments, shelfspace, store location and inventory replenishment frequencies. The model accounts for space-and cross-space elasticities of polynomial form, but does not differentiate between direct and backroom replenishment costs.…”

Section: Related Literature On Shelf-space Optimizationmentioning

confidence: 99%

Effect of replenishment and backroom on retail shelf-space planning

Hübner

Schaal

2017

Bus Res

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Shelf-space optimization models support retailers in making optimal shelf-space decisions. They determine the number of facings for each item included in an assortment. One common characteristic of these models is that they do not account for in-store replenishment processes. However, the two areas of shelf-space planning and in-store replenishment are strongly interrelated. Keeping more shelf stock of an item increases the demand for it due to higher visibility, permits decreased replenishment frequencies and increases inventory holding costs. However, because space is limited, it also requires the reduction of shelf space for other items, which then deplete faster and must be reordered and replenished more often. Furthermore, the possibility of keeping stock of certain items in the backroom instead of the showroom allows for more showroom shelf space for other items, but also generates additional replenishment costs for the items kept in the backroom. The joint optimization of both shelf-space decisions and replenishment processes has not been sufficiently addressed in the existing literature. To quantify the cost associated with the relevant in-store replenishment processes, we conducted a time and motion study for a German grocery retailer. Based on these insights, we propose an optimization model that addresses the mutual dependence of shelf-space decisions and replenishment processes. The model optimizes retail profits by determining the optimum number of facings, the optimum display orientation of items, and the optimum order frequencies, while accounting for space-elasticity effects as well as limited shelf and backroom space. Applying our model to the grocery retailer's canned foods category, we found a profit potential of about 29%. We further apply our model to randomly generated data and show that it can be solved to optimality within very short run times, even for large-scale problem instances. 123Business Research (2017) 10:123-156 DOI 10.1007 replenishment cost on retail profits and solution structures. Based on the insights gained from the application of our model, the grocery retailer has decided to change its current approach to shelf-space decisions and in-store replenishment planning.

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“…This is an important decision, which has a major effect on the sales performance of the retail store. 1 The other positive decisions, which are approximately 70% of purchasing decisions in a supermarket. 2 On the other hand, the shelf areas of a store are not regarded as equally important by customers.…”

Section: Introductionmentioning

confidence: 99%

“…In these studies, the impact of the location of the shelf is added to the demand function, which is based on space elasticity and crosselasticity. 1,7,8 Hwang et al 7 dealt with the shelf space allocation problem, in which the rate of demand is a function of the inventory level displayed and the location of the shelf; and presented two different approaches, based on the gradient search and genetic algorithm, as the solution for the developed model. Hwang et al 8 developed an integrated integer programming model for shelf-space design and allocation problem and proposed a genetic algorithm approach for solving the model.…”

Section: Introductionmentioning

confidence: 99%

“…Hwang et al 8 developed an integrated integer programming model for shelf-space design and allocation problem and proposed a genetic algorithm approach for solving the model. Hariga et al 1 proposed a mixed integer nonlinear programming model, which decides on product assortment, stock replenishment, merchandising space and shelf space allocation, objective to maximize retailer's profitability under the constraints of shelf space and storage. Hansen et al 5 presented a decision model for retail shelf space which integrates non-linear profit function, the effects of horizontal and vertical location and the cross-product elasticity.…”

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation

A Discrete Constrained Optimization Using Genetic Algorithms for A Bookstore Layout

Özcan¹,

Esnaf²

2013

IJCIS

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In retail industry, one of the most important decisions of shelf space management is the shelf location decision for products and product categories to be displayed in-store. The shelf location that products are displayed has a significant impact on product sales. At the same time, displaying complementary products close to each other increases the possibility of cross-selling of products. In this study, firstly, for a bookstore retailer, a mathematical model is developed based on association rule mining for store layout problem which includes the determination of the position of products and product categories which are displayed in-store shelves. Then, because of the NP-hard nature of the developed model, an original heuristic approach is developed based on genetic algorithms for solving large-scale real-life problems. In order to compare the performance of the genetic algorithm based heuristic with other methods, another heuristic approach based on tabu search and a simple heuristic that is commonly used by retailers are proposed. Finally, the effectiveness and applicability of the developed approaches are illustrated with numerical examples and a case study with data taken from a bookstore.

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A joint optimisation model for inventory replenishment, product assortment, shelf space and display area allocation decisions

Cited by 93 publications

References 10 publications

Review on Assortment Problems in Retailing Supply Chain Management

Review on Assortment Problems in Retailing Supply Chain Management

Effect of replenishment and backroom on retail shelf-space planning

A Discrete Constrained Optimization Using Genetic Algorithms for A Bookstore Layout

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