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A Dynamic Programming Heuristic For Retail Shelf Space Allocation Problem

Author

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  • HASMUKH K. GAJJAR

    (Shailesh J. Mehta School of Management, Indian Institute of Technology-Bombay, Powai, Mumbai, India 400076, India)

  • GAJENDRA K. ADIL

    (Shailesh J. Mehta School of Management, Indian Institute of Technology-Bombay, Powai, Mumbai, India 400076, India)

Abstract

Shelf space allocation to products greatly impacts the profitability in a retail store. In this paper, we consider a retail shelf-space allocation problem where retailer wishes to allocate the available spaces of different shelves to a large number of products considering direct space elasticity in the product's demand. There is a great interest to develop efficient heuristics due to NP-hard nature of this problem. We propose a dynamic programming heuristic (DPH) to obtain near optimal solution in a reasonable time to solve this problem. The empirical results found that DPH obtained near optimal solutions for randomly generated instances of problems with size (products, shelves) varying from (100, 30) to (200, 50) within a few seconds of CPU time. The performance of DPH is benchmarked against an existing local search heuristic (LSH). It was found that DPH takes substantially less CPU time and attains a solution close to that obtained by LSH. Thus, DPH has great potential to solve the problem of realistic size within reasonable time. The proposed DPH is also applied to a case of an existing retail store.

Suggested Citation

  • Hasmukh K. Gajjar & Gajendra K. Adil, 2011. "A Dynamic Programming Heuristic For Retail Shelf Space Allocation Problem," Asia-Pacific Journal of Operational Research (APJOR), World Scientific Publishing Co. Pte. Ltd., vol. 28(02), pages 183-199.
    • Handle: RePEc:wsi:apjorx:v:28:y:2011:i:02:n:s0217595911003120
    DOI: 10.1142/S0217595911003120
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    Cited by:

    1. Bianchi-Aguiar, Teresa & Silva, Elsa & Guimarães, Luis & Carravilla, Maria Antónia & Oliveira, José F., 2018. "Allocating products on shelves under merchandising rules: Multi-level product families with display directions," Omega, Elsevier, vol. 76(C), pages 47-62.
    2. Gecili, Hakan & Parikh, Pratik J., 2022. "Joint shelf design and shelf space allocation problem for retailers," Omega, Elsevier, vol. 111(C).
    3. Bianchi-Aguiar, Teresa & Hübner, Alexander & Carravilla, Maria Antónia & Oliveira, José Fernando, 2021. "Retail shelf space planning problems: A comprehensive review and classification framework," European Journal of Operational Research, Elsevier, vol. 289(1), pages 1-16.

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