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A Retail Category Management Model Integrating Shelf Space And Inventory Levels

Author

Listed:
  • B. RAMASESHAN

    (School of Marketing, Curtin University of Technology, Perth, 6148, Western Australia)

  • N. R. ACHUTHAN

    (Department of Mathematics & Statistics, Curtin University of Technology, Perth, 6148, Western Australia)

  • R. COLLINSON

    (Department of Mathematics & Statistics, Curtin University of Technology, Perth, 6148, Western Australia)

Abstract

A retail category management model that considers the interplay of optimal product assortment decisions, space allocation and inventory quantities is presented in this paper. Specifically, the proposed model maximizes the total net profit in terms of decision variables expressing product assortment, shelf space allocation and common review period. The model takes into consideration several constraints such as the available shelf space, backroom inventory space, retailer's financial resources, and estimates of rate of demand for products based on shelf space allocation and competing products. The review period can take any values greater than zero. Results of the proposed model were compared with the results of the current industry practice for randomly generated product assortments of size six, ten and fourteen. The model also outperformed the literature benchmark. The paper demonstrates that the optimal common review period is flexible enough to accommodate the administrative restrictions of delivery schedules for products, without significantly deviating from the optimal solution.

Suggested Citation

  • B. Ramaseshan & N. R. Achuthan & R. Collinson, 2009. "A Retail Category Management Model Integrating Shelf Space And Inventory Levels," Asia-Pacific Journal of Operational Research (APJOR), World Scientific Publishing Co. Pte. Ltd., vol. 26(04), pages 457-478.
    • Handle: RePEc:wsi:apjorx:v:26:y:2009:i:04:n:s0217595909002304
    DOI: 10.1142/S0217595909002304
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    Citations

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    Cited by:

    1. 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.
    2. Paballo Patience Ntobaki & Raymond Hawkins-Mofokeng & Tshepo Tlapana, 2022. "Consumer purchase behaviour of perishable products from selected stores in Durban," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 11(1), pages 76-81, January.
    3. Alexander Hübner & Kai Schaal, 2017. "Effect of replenishment and backroom on retail shelf-space planning," Business Research, Springer;German Academic Association for Business Research, vol. 10(1), pages 123-156, June.
    4. Bianchi-Aguiar, Teresa & Hübner, Alexander & Carravilla, Maria Antónia & Oliveira, José Fernando, 2021. "Retail shelf space planning problems: A comprehensive review and classification framework," European Journal of Operational Research, Elsevier, vol. 289(1), pages 1-16.
    5. Eisend, Martin, 2014. "Shelf space elasticity: A meta-analysis," Journal of Retailing, Elsevier, vol. 90(2), pages 168-181.

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