Genetic algorithm for the retailers’ shelf space allocation profit maximization problem

Abstract

This paper discusses the problem of retailers’ profit maximization regarding displaying products on the planogram shelves, which may have different dimensions in each store but allocate the same product sets. We develop a mathematical model and a genetic algorithm for solving the shelf space allocation problem with the criteria of retailers’ profit maximization. The implemented program executes in a reasonable time. The quality of the genetic algorithm has been evaluated using the CPLEX solver. We determine four groups of constraints for the products that should be allocated on a shelf: shelf constraints, shelf type constraints, product constraints, and virtual segment constraints. The validity of the developed genetic algorithm has been checked on 25 retailing test cases. Computational results prove that the proposed approach allows for obtaining efficient results in short running time, and the developed complex shelf space allocation model, which con-siders multiple attributes of a shelf, segment, and product, as well as product capping and nesting allocation rule, is of high practical relevance. The proposed approach allows retailers to receive higher store profits with regard to the actual merchandising rules.