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Transportation model for inventory replenishment in a retail store network

Abstract:

A fashion retailer that sells around 340 product categories through its fifteen stores is analyzed. In order to maximize the sales during the period of product showcase, the Commercial Planning team develop a monthly evaluation of the SKUs' sales and inventory by store, which has the aim of identifying stores with excess or lack of inventory to fulfil the sales plans. This work focusses on the design of a mathematical model which will determine the inventory movements by SKU among the stores. Therefore, it was decided to work with a multi-product transportation model that was developed in the GAMS optimization software. As a result, better coverage of demand was achieved, going from 21% with the current method to 37% with the optimization model. In addition, transportation costs were reduced by 86% and a 92% time savings was achieved in the analysis performed for the relocation of these goods.