Introducing Differential Evolution to Product Assortment Planning: Optimizing Variety and Service Levels of Private Labels in Retail Product Portfolios

Despite the longstanding recognition of the importance of product assortment planning (PAP), existing literature has failed to provide satisfactory solutions to a great deal of problems that reside in this area of research. This article introduces Differential Evolution (DE) in order to facilitate simultaneously, strategic PAP decisions, related to a) optimal variety of private label (PL) product categories, b) optimal service level of PL merchandise within a product category, and hence, c) optimal balance between PLs and national Brands (NBs) in a retailer’s product portfolio. The interrelated issue of assortment adaptation across different store formats is also considered. The proposed mechanism is illustrated through an implementation to an empirical dataset derived from a random sample of 1,928 consumers who participated in a large-scale computer assisted telephone survey.