EURO 2024 Copenhagen
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3335. Assortment Planning Optimization under Uncertainty with Customer-driven Product Substitution

Invited abstract in session TC-50: Assortment Management, stream Retail Operations.

Tuesday, 12:30-14:00
Room: M2 (building: 101)

Authors (first author is the speaker)

1. Jisoo Park
Industrial and Systems Engineering, Georgia Institute of Technology
2. Walid Klibi
Operations Management and Information Systems Department, KEDGE Business School
3. Benoit Montreuil
Industrial and Systems Engineering, Georgia Institute of Technology

Abstract

The evolving retail landscape, marked by increasing production costs and resource constraints, highlights the need for assortment planning decisions made with supply chain considerations. Retail product manufacturers typically have their assortment decisions led by the marketing department, yet these are intricately linked to operational decisions across procurement, production, and inventory planning. We propose an integrative optimization model to address assortment planning problem in a make-to-stock environment, leveraging customer substitution behaviors to mitigate supply and demand uncertainties. Our framework addresses the challenge of aligning product offerings with supply chain capabilities and customer preferences to maximize expected profit, while considering procurement and production capacity constraints. We formulate the problem as a multi-stage stochastic program with uncertain and time-varying demand, represented by multi-period look-ahead forecasts, as commonly observed in practice. Results are presented using data from an e-commerce furniture manufacturer and retailer.

Keywords

Status: accepted

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