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Bolet´ de Estad´ ın ıstica e Investigaci´n Operativa o Vol. 29, No. 2, Junio 2013, pp. 103-116

Investigaci´n Operativa o

Operations Management in Apparel Retailing: Processes, Frameworks and Optimization

Felipe Caro UCLA Anderson School of Management 110 Westwood Plaza, Suite B420 Los Angeles, CA 90095, USA

fcaro@anderson.ucla.edu

Victor Mart´ ınez-de-Alb´niz e IESE Business School University of Navarra Av. Pearson 21 08034 Barcelona, Spain

B valbeniz@iese.edu Abstract Apparel retailing is a large industry that requires managing simple yet highly uncertain and time-sensitive processes. Operations management frameworks can help in taking good design, production and distribution decisions quickly, using all the available information. Indeed, the success of “fast-fashion” retailers such as Zara is built on the use of simple principles that allow these companies to react to rapid changes in market conditions. In this article, we review the decision models at the basis of the current best practices. Keywords: Assortment planning, Sourcing, Inventory management, Distribution policies. AMS Subject classifications: 90B05, 90B30.

1. Introduction

The purpose of this article is to provide an overview of apparel retailing from an operational perspective. We start by providing an overview of the industry in Section 2 and the existing practices in Section 3. This allows us to identify three types of problems that can be analyzed using Operations Research techniques. We start from the last decision to be made: how to distribute inventory over the network of stores. The description of this problem and several solution

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approaches are discussed in Section 4. We then consider the previous decision, prior to distribution: how much and when to buy of one particular product. We discuss the different models in Section 5. We finally tackle the first decision: how many and which products to design, and when...