Title: A two-stage stochastic programming model for assortment optimisation

Authors: Khaled N. Alqahtani; Nazrul I. Shaikh

Addresses: Department of Industrial Engineering, College of Engineering, University of Miami, Coral Gables, Florida 33146, USA ' Department of Industrial Engineering, College of Engineering, University of Miami, Coral Gables, Florida 33146, USA

Abstract: This paper presents a two-stage stochastic programming model for retail assortment optimisation. Decisions related to what products to stock and in what quantity are taken in the first stage while decisions related to what products to use to satisfy the primary versus the secondary demand are taken in the second stage. Such a model is very useful for online retailers and catalogue merchants who witness a gap between an order arrival and fulfilment. A case study illustrating the modelling approach and its benefits as compared to other existing assortment optimisation techniques is also presented.

Keywords: stochastic programming; assortment planning; retail; demand substitution; two-stage models.

DOI: 10.1504/IJAMS.2019.101020

International Journal of Applied Management Science, 2019 Vol.11 No.3, pp.185 - 209

Received: 08 May 2021
Accepted: 12 May 2021

Published online: 01 Jul 2019 *

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