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A Decision Support System for Shelf Space Management in a European Retailer
Project Participants:
Teresa Bianchi Aguiar, Elsa Silva, Luis Guimarães, José F. Oliveira, Maria Antónia Carravilla
Short Description:
We
have worked together with a European Retailer to tackle its shelf space
management problems and develop a decision support tool to help
deciding on the best allocation of products on the shelves. Prior to
this project, the process was very time consuming, with an empirical use
of space elasticity, lacking formal performance evaluation criteria and
heavily depending on the space managers experience. Our challenge was
to bring analytical methods into the practice aiming to improve the
return on space and reduce out of stock situations without disrupting
(but somehow questioning) the company policies. We developed a modular
method that hierarchically applies tailor-made mathematical programming
models combined with heuristics. The key benefit of the approach is its
flexibility, allowing to trade-off between solutions biased towards
profit maximization or the company merchandising rules.
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