Congratulations to Argyro Katsifou for achieving her PhD
© Alain Herzog
Dr. Katsifou has earned her PhD under the supervision of Prof. Ralf Seifert, Chair of Technology & Operations Management with the title "Variable Product Portfolio Management in Retail Operations"
Abstract
Product assortment planning, pricing and inventory are among the most critical decisions facing retailers since they affect customers' store and product choices and ultimately retailers' profitability. These decisions are particularly challenging when resource constraints such as available shelf space need to be taken into account. Yet, due to the complexity of assortment, pricing and inventory joint consideration, these decisions are usually addressed independently leading to lower overall profit. This dissertation aims to shed light on the underlying complexity by gradually examining the trade-offs between the aforementioned decisions.
This dissertation initially examines the increasingly popular retail practice of using combined product assortments consisting of both regular “standard” products and more fashionable and short-lived “variable” products. The purpose of this practice is to increase store traffic by attracting heterogeneous classes of customers, driving up the sales of standard products due to the potential cross-selling effect. An iterative heuristic is proposed to solve the resulting product assortment, pricing and inventory optimization problem taking into consideration the limited available shelf space. Furthermore, in this dissertation the analysis is broadened to accommodate heterogeneous products and customers in general. The resulting NP hard optimization problem is solved by a proposed heuristic. The purpose of this general problem setting is to illustrate how different factors such as the limited shelf space and the price competitiveness among retailers might affect retailers’ overall retail strategy.
The ultimate objective of this research is to provide managerial insights that can assist retailers in their strategic decision-making concerning the best use of combined product assortment as well as to validate the managerial intuition about the positioning of different retailers in the marketplace.
Keywords: product assortment planning, inventory management, pricing optimization, limited shelf space, heterogeneous customers.