A retail category management model integrating shelf space and inventory levels

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 withthe 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

Does Lag Structure Really Matter in Optimizing Advertising Expenditures?

In this article, we examine whether a better econometric specification of the sales-advertising relationship leads to significantly improved decisions. Extending the pioneering work of Nerlove and Arrow, we analyze the sensitivity of the discounted profit flow to the dynamics of advertising. On the basis of a generalized variant of their constant-elasticity model, we compare various lag structures, and derive the corresponding decision rules to determine the optimal advertising budget. Financial consequences of misspecifications of the distributed-lag function are then evaluated. Our investigation is empirically illustrated on the basis of the data which served Palda for his demonstration of advertising cumulative effects.advertising, generalized lag structure, optimization

A Model of a Distribution Network Aggregate Performance

A model to evaluate distribution network performance is developed extending earlier work by Hartung and Fisher [Hartung, P. H., Fisher, J. L. 1965. Brand switching and mathematical programming in market expansion. Management Sci. 11 (10, August) 231-243.]. Our model differs on two counts: (1) it explicitly considers market dynamics and (2) the transition probability functions are robust. It is applied to describe the competitive position of a brand of gasoline on the Italian retail market.