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Initial Shipment Decisions for New Products at Zara

Author

Listed:
  • Jérémie Gallien

    (London Business School, London NW1 4SA, United Kingdom)

  • Adam J. Mersereau

    (Kenan-Flagler Business School, University of North Carolina, Chapel Hill, North Carolina 27599)

  • Andres Garro

    (Boston Consulting Group, Boston, Massachusetts 02109)

  • Alberte Dapena Mora

    (Inditex, S.A., 15143 Arteixo, A Coruña, Spain)

  • Martín Nóvoa Vidal

    (Inditex, S.A., 15143 Arteixo, A Coruña, Spain)

Abstract

Given uncertain popularity of new products by location, fast fashion retailer Zara faces a trade-off. Large initial shipments to stores reduce lost sales in the critical first days of the product life cycle, but maintaining stock at the warehouse allows restocking flexibility once initial sales are observed. In collaboration with Zara, we develop and test a decision support system featuring a data-driven model of forecast updating and a dynamic optimization formulation for allocating limited stock by location over time. A controlled field experiment run worldwide with 34 articles during the 2012 season showed an increase in total average season sales by approximately 2% and a reduction in the number of unsold units at the end of the regular selling season by approximately 4%.

Suggested Citation

  • Jérémie Gallien & Adam J. Mersereau & Andres Garro & Alberte Dapena Mora & Martín Nóvoa Vidal, 2015. "Initial Shipment Decisions for New Products at Zara," Operations Research, INFORMS, vol. 63(2), pages 269-286, April.
    • Handle: RePEc:inm:oropre:v:63:y:2015:i:2:p:269-286
    DOI: 10.1287/opre.2014.1343
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    7. Marko Hofmann & Silja Meyer-Nieberg, 2018. "Time to dispense with the p-value in OR?," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 26(1), pages 193-214, March.
    8. Khouja, Moutaz & Christou, Eliana & Stylianou, Antonis, 2020. "A heuristic approach to in-season capacity allocation in a multi-product newsvendor model," Omega, Elsevier, vol. 95(C).
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