Abstract

AbstractA dynamic programming approach is proposed to select optimally among a given set of products and allocate integer shelf-space units to the selected products in supermarkets. The approach is designed to consider general objective-function specifications that account for space elasticity, costs of sales, and potential demand-related marketing variables. The optimization is subject to constraints due to product supply availability, 'block' product allocation and operational requirements. A primary focus is on the development of a tractable model approach that can effectively be implemented on a microcomputer. A discussion of applications and computational experience on a microcomputer is provided to support the practical applicability of the optimization approach.