Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
5111792 | Omega | 2017 | 16 Pages |
Abstract
We develop the first optimization model and solution approach that takes stochastic demand into account, since the current literature applies deterministic models for shelf-space planning. By the means of an innovative modeling approach for the case with space- and positioning effects and the conversion of our problem into a mixed-integer problem, we obtain optimal results within very short run times for large-scale instances relevant in practice. Furthermore, we develop a solution approach to account for cross-space elasticity, and solve it using an own heuristic, which efficiently yields near-optimal results. We demonstrate that correctly considering space elasticity and demand variation is essential. The corresponding impacts on profits and solution structures become even more significant when space elasticity and stochastic demand interact, resulting in up to 5% higher profits and up to 80% differences in solution structures, if both effects are correctly accounted for. We develop an efficient modeling approach, compare the model results with approaches applied in practice and derive rules-of-thumb for planners.
Keywords
Related Topics
Social Sciences and Humanities
Business, Management and Accounting
Strategy and Management
Authors
Alexander Hübner, Kai Schaal,