Initial Shipment Decisions for New Products at Zara

Given uncertain popularity of new products by location, fast fashion retailer Zara faces a trade-off. Large initial shipments to stores reduce lost sales in the critical first days of the product life cycle, but maintaining stock at the warehouse allows restocking flexibility once initial sales are...

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Bibliographic Details
Published in:	Operations research Vol. 63; no. 2; pp. 269 - 286
Main Authors:	Gallien, Jérémie, Mersereau, Adam J., Garro, Andres, Mora, Alberte Dapena, Vidal, Martín Nóvoa
Format:	Journal Article
Language:	English
Published:	Linthicum INFORMS 01-03-2015 Institute for Operations Research and the Management Sciences
Subjects:	Analysis apparel industry Clothing and dress Clothing industry Clothing stores CROSSCUTTING AREAS Decision support systems demand learning field experiment Inventory control Operations research Optimization Product life cycle Production management retailing Retailing industry Sales Shipments Shipments data Warehousing Spain
Online Access:	Get full text
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Summary:	Given uncertain popularity of new products by location, fast fashion retailer Zara faces a trade-off. Large initial shipments to stores reduce lost sales in the critical first days of the product life cycle, but maintaining stock at the warehouse allows restocking flexibility once initial sales are observed. In collaboration with Zara, we develop and test a decision support system featuring a data-driven model of forecast updating and a dynamic optimization formulation for allocating limited stock by location over time. A controlled field experiment run worldwide with 34 articles during the 2012 season showed an increase in total average season sales by approximately 2% and a reduction in the number of unsold units at the end of the regular selling season by approximately 4%.
ISSN:	0030-364X 1526-5463
DOI:	10.1287/opre.2014.1343