Merchandise planning

S. A. Smith, N. Agrawal, and S. H. McIntyre. A discrete optimization model for seasonal merchandise planning. Journal of Retailing, 74(2) 193-221, 1998. 

There are several merchandising planning software solutions commercially available. 

Abstract Merchandise planning is the process conducted by a retailer to ensure that the... 

The proeess used to match supply with demand in the retailing industry is eonnnonly referred to as the Merchandise Planning Process. Broadly speaking, the objeetive of this process is to ensure that the product is available to the customer at the right quantity, price, time and place (the so called four holy rights of retailing ). Major decisions that arise in this proeess include the choice of products, determining their order quantities. 

In developing merchandise plans, the retailer divides the year into two seasons fall/winter and spring/summer. The first week of the fall/winter season is the first full week of September, while the first week of the spring/summer season is the first full week in April. In their current methodology, they select 25 test stores whose total dollar sales are close to average store sales for the chain. Product tests are conducted at these stores over a 3-week period. To develop a season forecast and supply plan for the entire chain, total sales during the test period are divided by two factors estimated from past sales history. The first factor equals the proportion of season sales that are historically observed during these 3 weeks, while the second factor equals the proportion of total sales that are observed at these 25 stores. 

In conclusion, we believe that the models described in this ehapter provides a powerful framework to improve the accuracy and analyze several crucial aspects of the merchandise planning process for retail fashion products. 

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