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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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