“Building Optimized and Hyperlocal Product Assortments: A Nonparametric Choice Approach used by Celect” by Vivek Farias (MIT), Srikanth Jagabathula (NYU), and Devavrat Shaw(MIT).

Bricks-and-mortar retailers with multiple stores must address the local tastes and preferences of the customers in those different locations.  For each store location, and given a dollar budget, the firm must decide how many of each product, style and color to carry—the assortment problem.  The authors bring a new methodological approach to this assortment problem, using individuals’ historical shopping patterns to predict demand for required stock keeping unit levels for specific stores.  They report an improvement of 6.65% in revenue when the approach was implemented, in line with model forecasts.

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Celect PowerPoint 1.37 MB 25 downloads