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Metaheuristics with Local Search Techniques for Retail Shelf-Space Optimization

Author

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  • Andrew Lim

    () (Department of Industrial Engineering and Engineering Management, Hong Kong University of Science and Technology, Clear Water Bay, Kowloon, Hong Kong)

  • Brian Rodrigues

    () (School of Business, Singapore Management University, 469 Bukit Timah Road, Singapore 259756)

  • Xingwen Zhang

    () (Department of Industrial Engineering and Engineering Management, Hong Kong University of Science and Technology, Clear Water Bay, Kowloon, Hong Kong)

Abstract

Efficient shelf-space allocation can provide retailers with a competitive edge. While there has been little study on this subject, there is great interest in improving product allocation in the retail industry. This paper examines a practicable linear allocation model for optimizing shelf-space allocation. It extends the model to address other requirements such as product groupings and nonlinear profit functions. Besides providing a network flow solution, we put forward a strategy that combines a strong local search with a metaheuristic approach to space allocation. This strategy is flexible and efficient, as it can address both linear and nonlinear problems of realistic size while achieving near-optimal solutions through easily implemented algorithms in reasonable timescales. It offers retailers opportunities for more efficient and profitable shelf management, as well as higher-quality planograms.

Suggested Citation

  • 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.
  • Handle: RePEc:inm:ormnsc:v:50:y:2004:i:1:p:117-131
    DOI: 10.1287/mnsc.1030.0165
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    File URL: http://dx.doi.org/10.1287/mnsc.1030.0165
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    References listed on IDEAS

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    1. Pierre Desmet & Valérie Renaudin, 1998. "Estimation of Product Category Sales Responsiveness to Allocated Shelf Space," Post-Print halshs-00143451, HAL.
    2. CAMPO, Katia & GIJSBRECHTS, Els & GOOSSENS, T. & VERHETSEL, Ann, "undated". "The impact of location-specific factors on attractiveness and performance of product categories," Working Papers 1999012, University of Antwerp, Faculty of Business and Economics.
    3. Yang, Ming-Hsien, 2001. "An efficient algorithm to allocate shelf space," European Journal of Operational Research, Elsevier, vol. 131(1), pages 107-118, May.
    4. Hansen, Pierre & Heinsbroek, Hans, 1979. "Product selection and space allocation in supermarkets," European Journal of Operational Research, Elsevier, vol. 3(6), pages 474-484, November.
    5. Anderson, Evan E, 1979. "An Analysis of Retail Display Space: Theory and Methods," The Journal of Business, University of Chicago Press, vol. 52(1), pages 103-118, January.
    6. Walters, Rockney G. & Bommer, William, 1996. "Measuring the Impact of Product and Promotion-Related Factors on Product Category Price Elasticities," Journal of Business Research, Elsevier, vol. 36(3), pages 203-216, July.
    7. Alain Bultez & Philippe Naert, 1988. "SH.A.R.P.: Shelf Allocation for Retailers' Profit," Marketing Science, INFORMS, vol. 7(3), pages 211-231.
    8. 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.
    9. Yuxin Chen & James D. Hess & Ronald T. Wilcox & Z. John Zhang, 1999. "Accounting Profits Versus Marketing Profits: A Relevant Metric for Category Management," Marketing Science, INFORMS, vol. 18(3), pages 208-229.
    10. Marcel Corstjens & Peter Doyle, 1981. "A Model for Optimizing Retail Space Allocations," Management Science, INFORMS, vol. 27(7), pages 822-833, July.
    11. repec:dau:papers:123456789/1757 is not listed on IDEAS
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    More about this item

    Keywords

    retail; shelf allocation; metaheuristics;

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