Application of Cluster Analysis in Inventory and Assortment Management

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MAGAZINE №6(89) December 2018



MILOV A.S. - Bauman Moscow State Technical University (Moscow, Russia)

CATEGORY  Analysis in logistics and SCM Inventory management  Retail companies’ corporate logistics


The application of cluster analysis requires serious advance preparation of business processes of profit companies' trade networks. But the benefits appearing after its implementation are unique.

  • There is the only practical opportunity to manage the assortment and improve the forecasting accuracy with the minimal availability of sales statistics on product stock keeping units or its total absence. This is especially true for both collector assortment with its annual rotation and new positions of traditional and seasonal assortment.
  • Subject to prompt performance of management and forecasting tasks it is possible to run down to the level of maximum detailing for each point of trade network realization, (and (or) each customer) and each commodity stock keeping unit. At this level traditional methods of assortment management do not work because of the high speed of decision making.
  • It becomes possible to automate the proposed processes in partnership with experts and neural network algorithm, for each realization place, which is an important task for trade networks for the purposes of «PSM technology». Taking into consideration a high level of processes detailing and traffic it is an extremely important achievement.

It became possible to create a unique assortment matrix for each point of purchase of goods (and (or) for each customer) and manage it online. This benefit allows to satisfy customers' demands better and, as a result, increase the financial flow of the company massively. Additional options of assortment management at the operational level have been received as a useful bonus

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