Optimizing the layout of a grocery/ convenience store to maximize revenue from impulse items
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In this paper we design a layout for a grocery/convenience store application based on the p-dispersion problem . The focus is to maximize the revenue from purchase of "impulse" items. We develop a two stage heuristic algorithm and employ a simulation analysis to verify the effectiveness and efficiency of our model. In the first stage, we spread "must-have" items using the p-dispersion algorithm. In the second stage, we improve our solution by utilizing a simulated annealing meta heuristic. We develop a computational study to test the approach. Our computational study demonstrates that: (i) the p-dispersion method develops a good initial solution, (ii) the simulated annealing meta heuristic significantly improves the initial solution, and (iii) a noticeable gain in impulse purchases is obtained even if customers follow shortest paths as they traverse the store. We also perform a case study which includes data from customer surveys regarding impulse purchases. The results from our case study further solidify the finding from our computational study.