Retailer shelf-space management with trade allowance: A Stackelberg game between retailer and manufacturers

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• 作者：Yu-Chung Tsao ; Jye-Chyi Lu ; Na An ; Faiz Al-Khayyal ; Richard W. Lu ; Guanghua Han
• 关键词：Optimization ; Promotion ; Statistical modeling.
• 刊名：International Journal of Production Economics
• 出版年：February, 2014
• 年：2014
• 卷：148
• 期：Complete
• 页码：133-144
• 全文大小：488 K

文摘

Motivated by the significant influence of trade allowance on store operation and the efficiency of shelf-space allocation, this article develops a model for optimizing category-level shelf-space management. A category shelf-space allocation framework with trade allowance is presented and a multi-player Retailer Stackelberg game is introduced to model the interaction between retailer and manufacturers. With this framework, a retailer maximizes profit by taking the manufacturers' trade allowance response into account, which provides a realistic approach of simultaneously determining the shelf-space and trade promotion decisions under the consideration of interactions among products. A piecewise linearization method is employed to reformulate the Mixed Integer Nonlinear Programming (MINLP) problem into a linear MIP problem for optimal solutions. Numerical examples demonstrate significant advantage of the proposed framework and quantitative analysis leads to a variety of managerial insights.