Shelf space re-allocation for out of stock reduction

• Published in: Computers & industrial engineering 2017-04, Vol.106, p.32-40
• Main Authors: Frontoni, E., Marinelli, F., Rosetti, R., Zingaretti, P.
• Format: Article
• Language: English
• Subjects: Integer linear programming; Out-of-stock; Shelf Detector System; Shelf space allocation
• ISSN: 0360-8352; 1879-0550
• DOI: 10.1016/j.cie.2017.01.021

•An ILP formulation is proposed for Shelf space re-allocation problem.•Out-of-stock data are collected from the Shelf Detector System in real time.•Space elastic demand function is linked with real-time statistical data.•Tests performed on real, random and large instances. A planogram is a detailed visual map that establishes product positions over a shelf in a retail store. It is designed to support an innovative merchandising approach, to increase sales and profits, to supply the best location of a product for suppliers and to better manage the shelves. Product selection and the shelf space reserved to each product is a central activity for retailers and Shelf Out of Stock (SOOS) events are often strongly related to planogram design. In this paper we present a solution to optimally re-allocate shelf space to minimize Out of Stock (OOS) events. The approach uses SOOS data coming in real time from a sensor network technology, named Shelf Detector System, and an Integer Linear Programming model that integrates a space elastic demand function. Experimental results, based on a real scenario in the diaper category in Belgium, have proved that the system can efficiently calculate a proper solution able to re-allocate space and reduce OOS events.