Assortment optimization with product level demand and substitution information

Lihua Bai, Junyan Wang, Nazrul I Shaikh

Research output: Contribution to journalArticle

Abstract

This article presents a mathematical model for jointly optimizing base stock levels for the multiple items subject to service level goals. The proposed model uses the expected demand and substitution probabilities between products as inputs and has been used to analyze the effects of demand variability on profitability under service level constraint. The results of the analysis demonstrate that neglecting customer-driven substitution or excluding the impacts of variability and correlations in demand leads to significantly inefficient assortments.

Original languageEnglish (US)
Pages (from-to)46-63
Number of pages18
JournalInternational Journal of Information Systems and Supply Chain Management
Volume11
Issue number3
DOIs
StatePublished - Jul 1 2018

Keywords

  • Assortment planning
  • Demand variability
  • Mixed integer programming
  • Retail

ASJC Scopus subject areas

  • Management Information Systems
  • Information Systems

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