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Initial Shipment Decisions for New Products at Zara

46 Pages Posted: 14 Jan 2014  

Jérémie Gallien

London Business School

Adam J. Mersereau

University of North Carolina Kenan-Flagler Business School

Andres Garro

Boston Consulting Group

Alberte Dapena Mora

Independent

Martin Novoa Vidal

Independent

Date Written: December 3, 2013

Abstract

Given uncertain popularity of new products by location, fast fashion retailer Zara faces a tradeoff. 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%.

Keywords: apparel/textile industry, inventory management

JEL Classification: L81, C61, C93

Suggested Citation

Gallien, Jérémie and Mersereau, Adam J. and Garro, Andres and Mora, Alberte Dapena and Vidal, Martin Novoa, Initial Shipment Decisions for New Products at Zara (December 3, 2013). Available at SSRN: https://ssrn.com/abstract=2378859 or http://dx.doi.org/10.2139/ssrn.2378859

Jérémie Gallien

London Business School ( email )

Sussex Place
Regent's Park
London, London NW1 4SA
United Kingdom

HOME PAGE: http://faculty.london.edu/jgallien/

Adam J. Mersereau (Contact Author)

University of North Carolina Kenan-Flagler Business School ( email )

McColl Building
Chapel Hill, NC 27599-3490
United States

Andres Garro

Boston Consulting Group ( email )

J.F. Kennedylaan 100
3741 EH Baarn
United States

Alberte Dapena Mora

Independent ( email )

Martin Novoa Vidal

Independent ( email )

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