EOQ Model with Shelf-Refill Trips in a Retail Store with Consideration of Product Pack Quantity and Shelf Space Allocation

Abstract

The replenishment process is a core process in retail operations; and a major part occurs in stores. The in-store shelf-filling operations require a great deal of manpower and more is required when the order quantity exceeds the shelf space quantity. This paper extends the EOQ inventory models developed earlier, so as to include consideration of the shelf-refill operations. We additionally incorporate the pack quantity as part of the factors in the inventory decisions, and include the possibility of multiple shelf-refill trips. The incorporation of the pack quantity will help make the model more realistic because, in practice, the order quantity to a largeformat retail store is in multiple packs. Analysis is performed and observations are made on how different order quantities with different pack and shelf space quantities have an effect on the replenishment cost. The results of this study lead to future research opportunities to develop an algorithm and a supplier-retailer collaboration model that will help managers, both in retailers and suppliers, to make better decisions about the order quantity, and pack and shelf space quantities.