A Model for Determining Retail Product Category Assortment and Shelf Space Allocation

  1. Norm Borin1,†,
  2. Paul W. Farris2,‡,
  3. James R. Freeland2,§

Article first published online: 7 JUN 2007

DOI: 10.1111/j.1540-5915.1994.tb00809.x

Issue

Decision Sciences

Decision Sciences

Volume 25, Issue 3, pages 359–384, May 1994

Additional Information

How to Cite

Borin, N., Farris, P. W. and Freeland, J. R. (1994), A Model for Determining Retail Product Category Assortment and Shelf Space Allocation. Decision Sciences, 25: 359–384. doi: 10.1111/j.1540-5915.1994.tb00809.x

Author Information

  1. 1

    Department of Business Administration, California Polytechnic State University, San Luis Obispo, CA 93407

  2. 2

    Darden Graduate School of Business Administration, The University of Virginia, Box 6550, Charlottesville, VA 22901-6550

  1. †

    Norm Borin is Associate Professor of Marketing at California Polytechnic State University in San Luis Obispo, California. He received his Ph.D. from the University of Virginia, his M.B.A. from the California State University, Sacramento, and a B.S. from the University of California, Davis. His current research interests include channel management with a focus on shelf management models and category management. His papers have been published in the Journal of Retailing, Journal of Direct Marketing, and the Journal of Education for Business. He is a member of AMA, TIMS, and AAA.

  2. ‡

    Paul W. Farris is Landmark Communications Professor of Business Administration at the Darden School, University of Virginia. He has a B.S. in business economics from the University of Missouri, an M.B.A. from the University of Washington, and a D.B.A. from Harvard University. His research has focused on the assessment of marketing costs and productivity.

  3. §

    James R. Freeland is the Sponsors Professor of Business Administration and the Associate Dean for Faculty at the Darden Graduate School of Business Administration at the University of Virginia and was formerly at Stanford University. He received his M.S. and Ph.D. in industrial and systems engineering from Georgia Institute of Technology and his B.S. in industrial engineering from Bradley University. He is the author of numerous technical and managerial papers in operations management and management science.

  • †

    Norm Borin is Associate Professor of Marketing at California Polytechnic State University in San Luis Obispo, California. He received his Ph.D. from the University of Virginia, his M.B.A. from the California State University, Sacramento, and a B.S. from the University of California, Davis. His current research interests include channel management with a focus on shelf management models and category management. His papers have been published in the Journal of Retailing, Journal of Direct Marketing, and the Journal of Education for Business. He is a member of AMA, TIMS, and AAA.

  • ‡

    Paul W. Farris is Landmark Communications Professor of Business Administration at the Darden School, University of Virginia. He has a B.S. in business economics from the University of Missouri, an M.B.A. from the University of Washington, and a D.B.A. from Harvard University. His research has focused on the assessment of marketing costs and productivity.

  • §

    James R. Freeland is the Sponsors Professor of Business Administration and the Associate Dean for Faculty at the Darden Graduate School of Business Administration at the University of Virginia and was formerly at Stanford University. He received his M.S. and Ph.D. in industrial and systems engineering from Georgia Institute of Technology and his B.S. in industrial engineering from Bradley University. He is the author of numerous technical and managerial papers in operations management and management science.

Publication History

  1. Issue published online: 7 JUN 2007
  2. Article first published online: 7 JUN 2007
  3. Received: January 28, 1993. Accepted: May 16, 1994.

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Keywords:

  • Heuristics;
  • Marketing Management;
  • Resource Allocation;
  • Simulation

Abstract

We develop a category management model to aid retailers in the space constrained decisions of which products to stock (assortment) and how much shelf space to allocate to those products. The model is formulated as a constrained optimization problem with two basic decision variables: assortment and allocation of space to the items in the assortment. The non-linearities in the objective function and the zero-one decision variables disallow a closed form solution. We develop a heuristic solution procedure based on simulated annealing and test it on a problem with a known optimum. We also apply the technique to a larger problem without a known optimum. Finally, the solution found by simulated annealing is compared against a solution produced using a shelf allocation rule based on share of sales.

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