Showcasing Optimization Model for Hyperconnected Showcasing Centers

摘要

Although the rise of e-commerce encourages the customers to order online and get the products shipped from the warehouse, for high value goods they still want to experience the product in person to gain confidence in their purchase. Furthermore, with the Physical Internet and highly efficient, interconnected networks, goods can be delivered fast and reliably, enabling the showcasing model to be an integral part of the supply chain. Goods do not need be stored in retail shops anymore as they can be shipped from available connected sources. Such changes accentuate the role of showcasing, and a decision support system to optimize the showcase that best meet customer’s expectation is needed. We thus propose a model for measuring and optimizing the showcasing value for a retailer, specifically focusing on recreational vehicle dealerships as an illustrative example. Even when the exact desired features are not available, the customer can gain partial confidence from similar features. We first introduce the concept of showcasing value. The showcasing optimization problem is then formulated as a mixed integer programming problem, where the objective function maximizes the sum of showcase representation value for all features in the showroom, given the feature demand shares and the weight of the feature categories. Computational experiments are conducted with data from the industry, focusing on dealerships in a region in United Sates. Our results indicate that a significant increase in the showcasing value can be achieved through an optimized showcase with little or no extra budget.