Decision Modeling and Analysis of Category Pricing and Shelf Space Management

create a true customer centered retail environment so that the store can quick response customers ’ needs to deliver the right products, right amounts to the right places with the shortest time. In this paper, we discussed the execution structure of retail category management with the considerations of category assortment, shelf space allocation, inventory service level, and price determination. A mathematical model was formed with an objective to maximize the category profit and the features of the model were explained in detail as well. We then applied a heuristics algorithm called simulated annealing to solve the model and simultaneously undertake experimental verification by checking the factual information from a large retail store in Taiwan. According to the results of the experimental information, profit benefits were improved under the model of category management. This study reveals that the construction of the execution structure of category management provides proprietors th