Browsing by Author "Cephe, E."

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Capacitated assortment planning of a multi-location system under transshipments
(Elsevier, 2022-09) Çömez-Dolgan, Nagihan; Moussawi-Haidar, L.; Jaber, M. Y.; Cephe, E.; Management Information Systems; ÇÖMEZ DOLGAN, Nagihan
We analyze a joint assortment optimization problem for multiple locations of a firm, where each of those locations has an assortment capacity. When one location does not keep a product in its assortment, it transships the requested product from another location when needed. If this is not possible, then demand may be fulfilled by a substitutable (second choice) product from the current location or another demand location through transshipment. We show that the resulting assortment planning problem is NP-complete. We provide structural properties of the optimal assortments that would simplify and speed up the search for the optimal solution. We specifically obtain the optimal product assortment in polynomial time when no substitutions are present. When both transshipments and substitutions are considered, the products adopted by all locations form a common assortment that includes the most popular products among customers, i.e., a popular set, which may not be valid for the individual assortment of each location. We derive an upper limit on customers' substitution probability for each location, such that at optimality, the location's capacity is utilized in full when the substitution probability is below this threshold value. Moreover, we show that when all locations have the same assortment capacity, utilizing theirs to the maximum reduces costly transshipment opportunities. Extensive numerical analyses are also conducted that illustrate the sensitivity of the optimal assortments to system characteristics and the benefits of allowing transshipment and demand substitution in multi-location assortment planning.
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Capacitated strategic assortment planning under explicit demand substitution
(Elsevier, 2021-11-01) Çömez-Dolgan, Nagihan; Fescioglu-Unver, N.; Cephe, E.; Şen, A.; Management Information Systems; ÇÖMEZ DOLGAN, Nagihan
Buyers have easier access to a variety of products with the rise of multi-channel distribution strategies and the increase in new product introductions. On the other hand, firms experience greater pressure in offering the correct product variety given that the manufacturing infrastructure often imposes physical and financial constraints in attaining variety. This study examines a firm's optimal assortment planning problem under an exogenous demand model, where each customer has a predetermined preference for each product from a potential set. Proportional demand substitutions are allowed from out-of-assortment products to those available. We show that the problem is NP-complete. We also show that an optimal assortment is composed of some number of the highest margin products, if one product having a higher margin than another implies that the former product has a lower demand rate than the latter. The firm's assortment capacity is fully utilized at the optimum if the customers’ substitution ratio does not exceed a particular threshold. We also introduce several approximate assortment policies that can be easily implemented, and test these policies through extensive numerical analyses. The results reveal that some of the policies can provide less than a 1% profit gap with an optimal solution for a 20-product set. The policy's performance highly depends on the firm's assortment capacity-to-product set size ratio. Moreover, we provide performance bounds for two of these well-performing approximate policies.