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Regionalized Assortment Planning for Multiple Chain Stores

In: Operations Research Proceedings 2016

Author

Listed:
  • Hans Corsten

    (University of Kaiserslautern)

  • Michael Hopf

    (University of Kaiserslautern)

  • Benedikt Kasper

    (University of Kaiserslautern)

  • Clemens Thielen

    (University of Kaiserslautern)

Abstract

In retail, assortment planning refers to selecting a subset of products to offer that maximizes profit. Assortments can be planned for a single store or a retailer with multiple chain stores where demand varies between stores. In this paper, we assume that a retailer with a multitude of stores wants to specify her offered assortment. To suit all local preferences, regionalization and store-level assortment optimization are widely used in practice and lead to competitive advantages. When selecting regionalized assortments, a trade-off between expensive, customized assortments in every store and inexpensive, identical assortments in all stores that neglect demand variation is preferable. We formulate a stylized model for the regionalized assortment planning problem (APP) with capacity constraints and given demand. In our approach, a common assortment that is supplemented by regionalized products is selected. While products in the common assortment are offered in all stores, products in the local assortments are customized and vary from store to store. Concerning the computational complexity, we show that the APP is strongly NP-hard. The core of this hardness result lies in the selection of the common assortment. We formulate the APP as an integer program and provide algorithms and methods for obtaining approximate solutions and solving large-scale instances. Lastly, we perform computational experiments to analyze the benefits of regionalized assortment planning depending on the variation in customer demands between stores.

Suggested Citation

  • Hans Corsten & Michael Hopf & Benedikt Kasper & Clemens Thielen, 2018. "Regionalized Assortment Planning for Multiple Chain Stores," Operations Research Proceedings, in: Andreas Fink & Armin Fügenschuh & Martin Josef Geiger (ed.), Operations Research Proceedings 2016, pages 451-457, Springer.
    • Handle: RePEc:spr:oprchp:978-3-319-55702-1_60
    DOI: 10.1007/978-3-319-55702-1_60
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    Cited by:

    1. Çömez-Dolgan, Nagihan & Moussawi-Haidar, Lama & Jaber, Mohamad Y. & Cephe, Ecem, 2022. "Capacitated assortment planning of a multi-location system under transshipments," International Journal of Production Economics, Elsevier, vol. 251(C).
    2. Çömez-Dolgan, Nagihan & Dağ, Hilal & Fescioglu-Unver, Nilgun & Şen, Alper, 2023. "Multi-plant manufacturing assortment planning in the presence of transshipments," European Journal of Operational Research, Elsevier, vol. 310(3), pages 1033-1050.

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