A theoretical model for testing new product sales velocity at small format retail stores

Hiroaki Sandoh; Roy Larke

RAIRO - Operations Research - Recherche Opérationnelle (2002)

  • Volume: 36, Issue: 2, page 157-172
  • ISSN: 0399-0559

Abstract

top
The present study proposes a theoretical model to test sales velocity for new products introduced in small format retail stores. The model is designed to distinguish fast moving products within a relatively short period. Under the proposed model, the sales of a newly introduced product are monitored for a prespecified period T , e.g., one week, and if the number of items sold over T is equal to a prespecified integer k or more, the product is considered a fast moving product and is carried over to the following sales periods. A slow moving product could be quickly replaced with alternative merchandise in order to make best use of shelf space. The paper first presents definitions of fast and slow moving products, and then a proposed sales test policy based on the model is formulated, where the expected loss is to be minimized with respect to the integer k . Numerical examples based on actual data collected from a convenience store in Japan are also presented to illustrate the theoretical underpinnings of the proposed sales test model.

How to cite

top

Sandoh, Hiroaki, and Larke, Roy. "A theoretical model for testing new product sales velocity at small format retail stores." RAIRO - Operations Research - Recherche Opérationnelle 36.2 (2002): 157-172. <http://eudml.org/doc/244932>.

@article{Sandoh2002,
abstract = {The present study proposes a theoretical model to test sales velocity for new products introduced in small format retail stores. The model is designed to distinguish fast moving products within a relatively short period. Under the proposed model, the sales of a newly introduced product are monitored for a prespecified period $T$, e.g., one week, and if the number of items sold over $T$ is equal to a prespecified integer $k$ or more, the product is considered a fast moving product and is carried over to the following sales periods. A slow moving product could be quickly replaced with alternative merchandise in order to make best use of shelf space. The paper first presents definitions of fast and slow moving products, and then a proposed sales test policy based on the model is formulated, where the expected loss is to be minimized with respect to the integer $k$. Numerical examples based on actual data collected from a convenience store in Japan are also presented to illustrate the theoretical underpinnings of the proposed sales test model.},
author = {Sandoh, Hiroaki, Larke, Roy},
journal = {RAIRO - Operations Research - Recherche Opérationnelle},
keywords = {sales test; fast moving product; slow moving product; expected loss; moving product},
language = {eng},
number = {2},
pages = {157-172},
publisher = {EDP-Sciences},
title = {A theoretical model for testing new product sales velocity at small format retail stores},
url = {http://eudml.org/doc/244932},
volume = {36},
year = {2002},
}

TY - JOUR
AU - Sandoh, Hiroaki
AU - Larke, Roy
TI - A theoretical model for testing new product sales velocity at small format retail stores
JO - RAIRO - Operations Research - Recherche Opérationnelle
PY - 2002
PB - EDP-Sciences
VL - 36
IS - 2
SP - 157
EP - 172
AB - The present study proposes a theoretical model to test sales velocity for new products introduced in small format retail stores. The model is designed to distinguish fast moving products within a relatively short period. Under the proposed model, the sales of a newly introduced product are monitored for a prespecified period $T$, e.g., one week, and if the number of items sold over $T$ is equal to a prespecified integer $k$ or more, the product is considered a fast moving product and is carried over to the following sales periods. A slow moving product could be quickly replaced with alternative merchandise in order to make best use of shelf space. The paper first presents definitions of fast and slow moving products, and then a proposed sales test policy based on the model is formulated, where the expected loss is to be minimized with respect to the integer $k$. Numerical examples based on actual data collected from a convenience store in Japan are also presented to illustrate the theoretical underpinnings of the proposed sales test model.
LA - eng
KW - sales test; fast moving product; slow moving product; expected loss; moving product
UR - http://eudml.org/doc/244932
ER -

References

top
  1. [1] E.E. Anderson and H.N. Amato, A mathematical model for simultaneously determining the optimal brand collection and display area allocation. Oper. Res. 22 (1974) 13-21. Zbl0273.90060MR408780
  2. [2] M.R. Czinkota and J. Woronoff, Unlocking Japan’s Markets: Seizing Marketing and Distribution Opportunities in Today’s Japan. Probus Publishing Company, Chicago (1991). 
  3. [3] A.S.C. Ehrenberg, Repeat Buying. North-Holland, Amsterdam (1972). 
  4. [4] D. Grewal, M. Levy, A. Mehrotra and A. Sharma, Planning merchandising decisions to account for regional and product assortment differences. J. Retailing 75 (1999) 405-424. 
  5. [5] P. Hansen and H. Heinsbroek, Product selection and space allocation in supermarkets. Eur. J. Oper. Res. 3 (1979) 58-63. Zbl0412.90033
  6. [6] R.M. Heeler, M.J. Kearney and B.J. Mehaffey, Modeling supermarket product selection. J. Marketing Res. X (1973) 34-37. 
  7. [7] R. Larke, Japanese Retailing. Routledge, London & New York (1994). 
  8. [8] G.L. Lilien, P. Kotler and K.S. Moorthy, Marketing Models. Prentice Hall, New Jersey (1992). 
  9. [9] P.J. McGoldrick, Retail Marketing. McGraw-Hill, London (1990). 
  10. [10] A.C. McKinnon, Physical Distribution Systems. Routledge, New York, NY (1989). 
  11. [11] Nihon Keizai Shinbun, Ryutsu Keizai no Tebiki 2000. Keizai Shinbun, Tokyo (2000) in Japanese. 
  12. [12] V. Padmanabhan and I.P.L. Png, Manufacturer’s returns policies and retail competition. Marketing Sci. 16 (1997) 81-94. 
  13. [13] S.M. Ross, Applied Probability Models with Optimization Applications. Holden-Day, San Francisco (1970). Zbl0213.19101MR264792
  14. [14] S.M. Ross, Introduction to probability models: Sixth edition. Academic Press, New York (1997). Zbl0914.60005
  15. [15] D.C. Schmittlein, D.G. Morrison and R. Colombo, Counting your customers: Who are they and what will they do next? Management Sci. 33 (1987) 1-24. 
  16. [16] M. Shimaguchi, Marketing Channels in Japan. IMI, Michigan, Mass. (1977). 
  17. [17] S.M. Shugan, Product assortment in a triopoly. Management Sci. 35 (1989) 304-321. 
  18. [18] G.L. Urban, A mathematical modelling approach to product line decisions. J. Marketing Res. 6 (1969) 40-47. 
  19. [19] T.L. Urban, An inventory-theoretic approach to product assortment and shelf-space allocation. J. Retailing 74 (1998) 15-35. 
  20. [20] USITC (United States International Trade Commission), Japan’s Distribution System and Improving options for US Access. Government printing office, Washington DC (1990). 
  21. [21] F.S. Zufryden, A dynamic programming approach for product selection and supermarket shelf-space allocation. J. Oper. Res. Soc. 37 (1986) 413-422. 
  22. [22] F.S. Zufryden, New computational results with a dynamic programming approach for product selection and supermarket shelf-space allocation. J. Oper. Res. Soc. 38 (1987) 201-204. 

NotesEmbed ?

top

You must be logged in to post comments.

To embed these notes on your page include the following JavaScript code on your page where you want the notes to appear.

Only the controls for the widget will be shown in your chosen language. Notes will be shown in their authored language.

Tells the widget how many notes to show per page. You can cycle through additional notes using the next and previous controls.

    
                

Note: Best practice suggests putting the JavaScript code just before the closing </body> tag.