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Assortment Optimization with Product Level Demand and Substitution Information

Assortment Optimization with Product Level Demand and Substitution Information

Lihua Bai, Junyan Wang, Nazrul I. Shaikh
Copyright: © 2018 |Volume: 11 |Issue: 3 |Pages: 18
ISSN: 1935-5726|EISSN: 1935-5734|EISBN13: 9781522543121|DOI: 10.4018/IJISSCM.2018070103
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MLA

Bai, Lihua, et al. "Assortment Optimization with Product Level Demand and Substitution Information." IJISSCM vol.11, no.3 2018: pp.46-63. http://doi.org/10.4018/IJISSCM.2018070103

APA

Bai, L., Wang, J., & Shaikh, N. I. (2018). Assortment Optimization with Product Level Demand and Substitution Information. International Journal of Information Systems and Supply Chain Management (IJISSCM), 11(3), 46-63. http://doi.org/10.4018/IJISSCM.2018070103

Chicago

Bai, Lihua, Junyan Wang, and Nazrul I. Shaikh. "Assortment Optimization with Product Level Demand and Substitution Information," International Journal of Information Systems and Supply Chain Management (IJISSCM) 11, no.3: 46-63. http://doi.org/10.4018/IJISSCM.2018070103

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Abstract

This article presents a mathematical model for jointly optimizing base stock levels for the multiple items subject to service level goals. The proposed model uses the expected demand and substitution probabilities between products as inputs and has been used to analyze the effects of demand variability on profitability under service level constraint. The results of the analysis demonstrate that neglecting customer-driven substitution or excluding the impacts of variability and correlations in demand leads to significantly inefficient assortments.

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