Capacitated strategic assortment planning under explicit demand substitution

Name: Capacitated strategic assortment planning under explicit demand substitution
Author: Çömez-Dolgan, Nagihan, Fescioglu-Unver, N., Cephe, E., Şen, A.

İsim	Capacitated strategic assortment planning under explicit demand substitution
Yazar	Çömez-Dolgan, Nagihan, Fescioglu-Unver, N., Cephe, E., Şen, A.
Basım Tarihi:	2021-11-01
Basım Yeri	- Elsevier
Konu	Production, Production variety, Substitution, Assortment capacity, Exogenous demand
Tür	Süreli Yayın
Dil	İngilizce
Dijital	Evet
Yazma	Hayır
Kütüphane:	Özyeğin Üniversitesi
Demirbaş Numarası	0377-2217
Kayıt Numarası	166cf92c-5536-416b-963d-655af47c3a83
Lokasyon	Management Information Systems
Tarih	2021-11-01
Notlar	TÜBİTAK
Örnek Metin	Buyers have easier access to a variety of products with the rise of multi-channel distribution strategies and the increase in new product introductions. On the other hand, firms experience greater pressure in offering the correct product variety given that the manufacturing infrastructure often imposes physical and financial constraints in attaining variety. This study examines a firm's optimal assortment planning problem under an exogenous demand model, where each customer has a predetermined preference for each product from a potential set. Proportional demand substitutions are allowed from out-of-assortment products to those available. We show that the problem is NP-complete. We also show that an optimal assortment is composed of some number of the highest margin products, if one product having a higher margin than another implies that the former product has a lower demand rate than the latter. The firm's assortment capacity is fully utilized at the optimum if the customers’ substitution ratio does not exceed a particular threshold. We also introduce several approximate assortment policies that can be easily implemented, and test these policies through extensive numerical analyses. The results reveal that some of the policies can provide less than a 1% profit gap with an optimal solution for a 20-product set. The policy's performance highly depends on the firm's assortment capacity-to-product set size ratio. Moreover, we provide performance bounds for two of these well-performing approximate policies.
DOI	10.1016/j.ejor.2021.02.026
Cilt	294

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Capacitated strategic assortment planning under explicit demand substitution

Yazar Çömez-Dolgan, Nagihan, Fescioglu-Unver, N., Cephe, E., Şen, A.

Basım Tarihi 2021-11-01

Basım Yeri - Elsevier

Konu Production, Production variety, Substitution, Assortment capacity, Exogenous demand

Tür Süreli Yayın

Dil İngilizce

Dijital Evet

Yazma Hayır

Kütüphane Özyeğin Üniversitesi

Demirbaş Numarası 0377-2217

Kayıt Numarası 166cf92c-5536-416b-963d-655af47c3a83

Lokasyon Management Information Systems

Tarih 2021-11-01

Notlar TÜBİTAK

Örnek Metin Buyers have easier access to a variety of products with the rise of multi-channel distribution strategies and the increase in new product introductions. On the other hand, firms experience greater pressure in offering the correct product variety given that the manufacturing infrastructure often imposes physical and financial constraints in attaining variety. This study examines a firm's optimal assortment planning problem under an exogenous demand model, where each customer has a predetermined preference for each product from a potential set. Proportional demand substitutions are allowed from out-of-assortment products to those available. We show that the problem is NP-complete. We also show that an optimal assortment is composed of some number of the highest margin products, if one product having a higher margin than another implies that the former product has a lower demand rate than the latter. The firm's assortment capacity is fully utilized at the optimum if the customers’ substitution ratio does not exceed a particular threshold. We also introduce several approximate assortment policies that can be easily implemented, and test these policies through extensive numerical analyses. The results reveal that some of the policies can provide less than a 1% profit gap with an optimal solution for a 20-product set. The policy's performance highly depends on the firm's assortment capacity-to-product set size ratio. Moreover, we provide performance bounds for two of these well-performing approximate policies.

DOI 10.1016/j.ejor.2021.02.026

Cilt 294