Brand assortment

bias
optimization
brand

#1

Hi,

I want to see the bias of different brands at a store level. For instance there are 100 stores and there are three brands in each store. Sales ($) and Sales (#), Profit, Sell through (units sold/ total stock) are the variables that i have in addition ti other metrics. I need to come up with the approach which helps me decide the stock ratio of A, B and C brands that i need to maintain for every store. Any suggestions would be helpful .


#2

Hi Kishore, it’s an interesting question!

Here is how I’d have approached it.

Let’s assume I’m running this business and for now let’s consider a single store in isolation. My prime goal would be to stock the items that not only have great sell through rates but also contributes highest REVENUE per ITEM (this way we can maximize the revenue contribution of this brand as well).

Right now, I’ll only consider the situation where you want to see the brand bias for present and not for future since for future you also need to include the forecasting the stock quantity.

Now your problem drills down to a linear programming scenario where you need to maximize following things:

  1. Revenue contribution per brand.

  2. Number of qty sold. This is already considered in sell through rate.

  3. Sell through rate.

OR instead maximize the product of SELL THROUGH rate and TOTAL REVENUE CONTRIBUTED by that brand.

doing this, I’m basically stocking product that sells more that ultimately contributes more revenue to my sales.

As a constraint, you can have the stock limit that a store can have.

I hope this solves your problem. If not, let me know.

Peace!
Gaurav