A Joint Decision Model of Variants Selection, Shelf-space Allocation and Inventory Control

Abstract

The problem of jointly determining product variety (PV), shelf-space allocation (SSA) and inventory control (IC) for different items of a certain brand product is studied in this paper. Based on formulating demand rate as a function of time, promotion and shelf-space, a joint decision model of variants selection, shelf-space allocation and inventory control is established to maximize total profits, subject to given stocking space constraints and service level constraints. Also a numerical solving algorithm for this model is given. Finally, numerical results and conclusions are presented, which show that this joint decision model could evidently increase 115 percent profit higher than the policies applied by retailer before.