Inventory reallocation in a fashion retail network: A matheuristic approach

Paolo Brandimarte, Giuseppe Craparotta and Elena Marocco

European Journal of Operational Research, 2024, vol. 317, issue 2, 603-615

Abstract: We consider a fashion retail network consisting of a central warehouse, owned by a fashion firm, and a fairly large number of retail stores. Some stores are owned by the firm itself, whereas others are owned by franchisees. An initial inventory allocation decision is made at the beginning of the selling season and is periodically revised. Inventory reallocation comprises both direct shipments from the warehouse to stores and lateral shipments among the stores. Besides stock availability and shipping costs, a suitable reallocation policy must take into account the probability of selling each item, some operational constraints, as well as other preference factors that define the utility of shipping an item from a node of the network to another one. Since the problem does not lend itself to the application of typical tools from inventory theory, we propose an optimization model that complements such tools. The model, given the number of nodes and SKUs, may involve about one million binary variables, and just solving the LP relaxation may take hours using state-of-the-art software. Since typical metaheuristics for combinatorial optimization do not seem a viable alternative, we propose a matheuristic approach, in which a sequence of maximum-weight matching problems is solved in order to reduce the problem and restrict the set of potential shipping pairs, with a corresponding drop in the number of decision variables. Computational results obtained on a set of real-life problem instances are discussed, showing the viability of the proposed algorithm.

Keywords: Heuristics; Fashion retailing; Inventory rebalancing; Lateral shipments (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0377221724002972
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:ejores:v:317:y:2024:i:2:p:603-615

DOI: 10.1016/j.ejor.2024.04.016

Access Statistics for this article

European Journal of Operational Research is currently edited by Roman Slowinski, Jesus Artalejo, Jean-Charles. Billaut, Robert Dyson and Lorenzo Peccati

More articles in European Journal of Operational Research from Elsevier
Bibliographic data for series maintained by Catherine Liu ().