A shelf space allocation decisions model with inventory-level-dependent demand

Shelf on which products are displayed is one of the retailer´s most important assets. Retailers can increase their profit by proper shelf space allocation. This paper addresses a problem of retailer who sells various brands of products by shelves. It is assumed that shelf space has a significant effect on sales. We firstly develop mathematical model for one product with the objective of maximizing the retailer´s profit under given shelf space and the method for solving the model is presented. Then a shelf space allocation model for multi-products with inventory-level-dependent demand is developed and a zero-one integer programming is proposed to solve the model. Finally, numerical examples are used to illustrate the developed models.