Assortment Planning Models: An Analytical and Empirical Investigation

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Assortment planning at a retailer mainly consists of three elements: (a) how many different categories does the retailer carry(called a retailer's breadth), (b) how many products do they carry in each category(called depth), and (c) how much inventory do they stock of each product. The fundamental goal of assortment planning then is to specify an assortment that maximizes sales or gross margin subject to various constraints, such as a limited budget for purchase of products, limited shelf space for displaying products, and a variety of miscellaneous constraints such as a desire to have at least two vendors for each type of product. The objective of the proposed research program is to understand how retailers can: (i) make robust assortment decisions, (ii) localize the product offering across stores, (iii) price the products offered optimally, and (iv) make optimal product placement decisions in search-based choice settings. We propose to achieve these goals by developing an integrated framework to study assortment planning decisions, and analyzing each of the issues outlined above in great detail using a combination of analytical and empirical methodologies.