Consumer‐driven retail operations: The moderating effects of consumer demand and case pack quantity

Abstract

Purpose

The purpose of this paper is to investigate the direct and interaction effects of shelf space, case pack quantity, and consumer demand on shelf stockouts, i.e. stockouts at the shelf level when inventory is available in the backroom of a retail store.

Design/methodology/approach

This study uses discrete‐event simulation based on data collected from the ready‐to‐eat breakfast cereal category with multiple stockkeeping units (SKUs) to model a retail supply chain consisting of a supplier, a retailer, and consumers.

Findings

The results indicate that shelf space and case pack quantity have direct effects on shelf stockouts. Furthermore, evidence is found for interactions among shelf space, case pack quantity and consumer demand. Though many retailers adopt simple heuristics for shelf space allocation, such as a multiple of case pack quantity, this study suggests that such heuristics tend to over‐ or underestimate shelf space requirements when consumer demand is ignored.

Originality/value

This study suggests that managers should allocate shelf space for SKUs on the basis of not only case pack quantity but also consumer demand.

Citation

Eroglu, C., Williams, B.D. and Waller, M.A. (2011), "Consumer‐driven retail operations: The moderating effects of consumer demand and case pack quantity", International Journal of Physical Distribution & Logistics Management, Vol. 41 No. 5, pp. 420-434. https://doi.org/10.1108/09600031111138808