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Allocating products on shelves under merchandising rules: Multi-level product families with display directions


  • Bianchi-Aguiar, Teresa
  • Silva, Elsa
  • Guimarães, Luis
  • Carravilla, Maria Antónia
  • Oliveira, José F.


Retailers’ individual products are categorized as part of product families. Merchandising rules specify how the products should be arranged on the shelves using product families, creating more structured displays capable of increasing the viewers’ attention. This paper presents a novel mixed integer programming formulation for the Shelf Space Allocation Problem considering two innovative features emerging from merchandising rules: hierarchical product families and display directions. The formulation uses single commodity flow constraints to model product sequencing and explores the product families’ hierarchy to reduce the combinatorial nature of the problem. Based on the formulation, a mathematical programming-based heuristic was also developed that uses product families to decompose the problem into a sequence of sub-problems. To improve performance, its original design was adapted following two directions: recovery from infeasible solutions and reduction of solution times. A new set of real case benchmark instances is also provided, which was used to assess the formulation and the matheuristic. This approach will allow retailers to efficiently create planograms capable of following merchandising rules and optimizing shelf space revenue.

Suggested Citation

  • Bianchi-Aguiar, Teresa & Silva, Elsa & Guimarães, Luis & Carravilla, Maria Antónia & Oliveira, José F., 2018. "Allocating products on shelves under merchandising rules: Multi-level product families with display directions," Omega, Elsevier, vol. 76(C), pages 47-62.
  • Handle: RePEc:eee:jomega:v:76:y:2018:i:c:p:47-62
    DOI: 10.1016/

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    References listed on IDEAS

    1. Hansen, Jared M. & Raut, Sumit & Swami, Sanjeev, 2010. "Retail Shelf Allocation: A Comparative Analysis of Heuristic and Meta-Heuristic Approaches," Journal of Retailing, Elsevier, vol. 86(1), pages 94-105.
    2. Hasmukh K. Gajjar & Gajendra K. Adil, 2011. "A Dynamic Programming Heuristic For Retail Shelf Space Allocation Problem," Asia-Pacific Journal of Operational Research (APJOR), World Scientific Publishing Co. Pte. Ltd., vol. 28(02), pages 183-199.
    3. Yang, Ming-Hsien & Chen, Wen-Cher, 1999. "A study on shelf space allocation and management," International Journal of Production Economics, Elsevier, vol. 60(1), pages 309-317, April.
    4. Murray, Chase C. & Talukdar, Debabrata & Gosavi, Abhijit, 2010. "Joint Optimization of Product Price, Display Orientation and Shelf-Space Allocation in Retail Category Management," Journal of Retailing, Elsevier, vol. 86(2), pages 125-136.
    5. Hariga, Moncer A. & Al-Ahmari, Abdulrahman & Mohamed, Abdel-Rahman A., 2007. "A joint optimisation model for inventory replenishment, product assortment, shelf space and display area allocation decisions," European Journal of Operational Research, Elsevier, vol. 181(1), pages 239-251, August.
    6. Robert Russell & Timothy Urban, 2010. "The location and allocation of products and product families on retail shelves," Annals of Operations Research, Springer, vol. 179(1), pages 131-147, September.
    7. repec:dau:papers:123456789/1757 is not listed on IDEAS
    8. Yang, Ming-Hsien, 2001. "An efficient algorithm to allocate shelf space," European Journal of Operational Research, Elsevier, vol. 131(1), pages 107-118, May.
    9. Hübner, Alexander & Schaal, Kai, 2017. "A shelf-space optimization model when demand is stochastic and space-elastic," Omega, Elsevier, vol. 68(C), pages 139-154.
    10. Ghoniem, Ahmed & Maddah, Bacel, 2015. "Integrated retail decisions with multiple selling periods and customer segments: Optimization and insights," Omega, Elsevier, vol. 55(C), pages 38-52.
    11. Hwang, Hark & Choi, Bum & Lee, Min-Jin, 2005. "A model for shelf space allocation and inventory control considering location and inventory level effects on demand," International Journal of Production Economics, Elsevier, vol. 97(2), pages 185-195, August.
    12. Pierre Desmet & Valérie Renaudin, 1998. "Estimation of Product Category Sales Responsiveness to Allocated Shelf Space," Post-Print halshs-00143451, HAL.
    13. Hübner, Alexander H. & Kuhn, Heinrich, 2012. "Retail category management: State-of-the-art review of quantitative research and software applications in assortment and shelf space management," Omega, Elsevier, vol. 40(2), pages 199-209, April.
    14. Andrew Lim & Brian Rodrigues & Xingwen Zhang, 2004. "Metaheuristics with Local Search Techniques for Retail Shelf-Space Optimization," Management Science, INFORMS, vol. 50(1), pages 117-131, January.
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