Publication: Optimizing product assortment under customer-driven demand substitution
Program
KU Authors
Co-Authors
Advisor
Publication Date
2009
Language
English
Type
Conference proceeding
Journal Title
Journal ISSN
Volume Title
Abstract
The problem of product assortment and inventory planning under customer-driven demand substitution is analyzed and a mathematical model for this problem is provided in this paper. Realistic issues in a retail context such as supplier selection, shelf space constraints, and poor quality procurement are also taken into account. The performance of three modified models, one that neglects customers' substitution behavior, another that excludes supplier selection decision, and one that ignores shelf space limitations, are analyzed separately with computational experiments. The results of the analysis demonstrate that neglecting customer-driven substitution or excluding supplier selection or ignoring shelf space limitations may lead to significantly inefficient assortments. The effects of demand variability and substitution cost on optimal assortment and supplier selection decisions as well as on the optimal revenue are also investigated. The main contribution of this paper is the development of a practical and flexible model to aid retailers in finding optimal assortments to maximize the expected profit.
Description
Source:
European Journal Of Operational Research
Publisher:
Elsevier Science Bv
Keywords:
Subject
Management, Operations research, Management science