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Direct product profitability and retail shelf-space allocation models

Merchants both small and large are well aware that certain items in their product line may contribute more to sales than to profit. Allotment of selling area to particular brands is thus important, and although there are many other opportunities to apply management science modelling in retailing (Higgins 1981), the preceding choices on space can limit other decision options available to the retail merchant.

There seem to be two main approaches in the literature on shelf-space allocation. On the academic side, there are mathematical programming models for dividing a given amount of shelf space between products 1, 2, ..., k. Corstjens and Doyle (1981) develop a nonlinear programming model to ...

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