Business Analysis and Decision Making
[pic 1][pic 2][pic 3][pic 4]Table of ContentsIntroduction: Methodology: Strength and ‘value adds’ of the models: Weaknesses and ‘knowledge gaps’ of the models: Conclusion: References: Appendices: Introduction:Cott Corporation is one of the world’s largest suppliers of company branded soft drinks, with 60 manufacturing facilities and 180 distribution centres in the United States (Cott 2016). The organisation, which supplies its products on behalf of retailers and distributors, has the capacity to provide beverages to approximately 90% of U.S (Cott 2016) households and offices. Whilst the company’s opportunities to enhance profit are increased through multiple product facing options for its higher selling items, their current business model faces imminent challenges. In addition to the challenges around having to operate within the parameters of its distributors, the company’s profit generation faces increased risk through Walmart’s recent decision to reduce shelf space for Cott’s carbonated beverages (Canadian Press 2008). Cott Corporation’s 2015 Annual Report to investors identified a reduction to shelf space as a key threat to the company’s ability to compete with other businesses in the same market space (Cott 2016). As such, this problem needs to be addressed in order to ensure the company’s future success.
Our view is that Cott Corp could benefit from the use of a linear programming (LP) model with the objective function of ‘profit maximisation’ to optimise revenue through the strategic display of its products. In developing a LP model for Cott, some of the constraints that apply include; space availability- allocated space for the products should not exceed the available space on that shelf, predefined upper and lower limits of number of product facings, and number of product facings must be a non-negative integer. Methodology:In order to rationalise a case around the use of LP, in this scenario, a review of recent literature investigating the optimisation of shelf space was conducted. The research was limited to publications from 1995 through to 2015 in order to obtain relevant and up to date examples of LP for similar examples in this field. The search was conducted primarily through academic search engines ‘Sciencedirect’ and ‘Google scholar’. Key search terms used to identify relevant articles were ‘linear programming’, ‘shelf space’, ‘optimisation’, ‘shelf allocation’, ‘model’ and ‘product assortment’. Once the articles were identified, they were screened for relevance against our evaluation criteria to determine their relevance to Cott’s problem. Our evaluation criteria were based on the following features: