Product image allocation and inventory control of online stores

Abstract

Purpose – This study assumes image size and location, product substitution, and product supply to be factors influencing the purchase decision. Under such assumption, shelf-space allocation and inventory theories are integrated, and operating profit and cost of the online store under the supply policy that prevent stockouts are analyzed to develop an optimal model for inventory control and product image allocation. The paper aims to discuss these issues. Design/methodology/approach – The developed model takes both order cost and holding cost into account when calculating the total cost. As the model presented is an integer non-linear programming problem, this study adopts genetic algorithm to solve the problem. Findings – Numerical examples are provided in this study to demonstrate the applicability of the model and to illustrate the search for parameters that possess greater influence over the operating profit of the store. Originality/value – This study provides a mixed integer non-linear programming model for the joint optimization of graphic design and inventory control problem. Online store owners may take the results of this study as a reference for decision-making purposes.