(A) study on shelf space allocation, inventory control and pricing decisions in retailer

Abstract

The shelf space allocation problem is to deal with optimally allocating shelf space to each brand of items so as to maximize the total sales volume. These models formulated the demand rate as a function of the shelf space allocated to the product and, sometimes, to the shelf space allocated to competing, substitute, and/or complementary products. We consider three different problems about shelf space allocation, and develop algorithms for the problems. First, we address a problem of retailer who sells various brands of items through displaying on multi-level shelves. It is assumed that the level of shelf on which the product is displayed has a significant effect on sales. We develop an integrated mathematical model for the shelf space allocation problem and inventory-control problem with the objective of maximizing the retailer’s profit. Then, a gradient search heuristic and a genetic algorithm are proposed for the solution to the model. Secondly, we study a problem of retailers who sells various brands of items through displaying on shelf space. We develop an integrated mathematical model for the shelf space design and allocation problem with the objective of maximizing the retailer’s profit. Then genetic algorithms are proposed for the solution to the model. Finally, we address a pricing problem of two manufacturers who produce and supply competing brands of an item to a retailer. The items produced are displayed on the retailer’s shelves for sale to customers. Based on the unit-price of the manufacturers, the retailer decides the unit-retail price as well as allocates the items optimally to a given shelf space in a way to maximize his profit. Both manufacturers can influence the pricing and allocation decision of the retailer by controlling their unit-supply price which in turn affects the demand of the customers. We formulate the pricing problem of the manufacturers using a Stackelberg game approach with the manufactures as leaders and the retailer a...