Economics at your fingertips  

A decision support model for determining the level of product variety with marketing and supply chain considerations

Siddhartha S. Syam and Amit Bhatnagar

Journal of Retailing and Consumer Services, 2015, vol. 25, issue C, 12-21

Abstract: We develop a decision support model to determine the optimal product variety for a manufacturer by accounting for both the marketing and supply chain perspectives. While the marketing perspective tends to focus on variety's salience to consumers, the supply chain perspective tends to focus on inventory management and distribution factors such as order fulfillment rates, fill rates, and related costs. In general, the supply chain costs increase as product variety increases, but this overall trend may be arrested to some extent by advanced manufacturing techniques such as modularization. These techniques often generate an irregular cost function that poses a modeling challenge. We address this issue by developing a piecewise ILP (integer linear program) model, and demonstrate its utility by applying it in a systematic managerial simulation study. The simulation examines how the optimal level of product variety and the corresponding selection of products depend on the revenue and cost characteristics of products.

Keywords: Product variety; Integer programming; Optimization; Supply chain (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2) Track citations by RSS feed

Downloads: (external link)
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:

DOI: 10.1016/j.jretconser.2015.03.004

Access Statistics for this article

Journal of Retailing and Consumer Services is currently edited by Harry Timmermans

More articles in Journal of Retailing and Consumer Services from Elsevier
Bibliographic data for series maintained by Haili He ().

Page updated 2020-05-02
Handle: RePEc:eee:joreco:v:25:y:2015:i:c:p:12-21