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Zara uses operations research to reengineer its global distribution system

Journal

Interfaces

Subject

Management Science and Operations

Publishing details

Interfaces 2010 Vol 40:1 p 71-84

Authors / Editors

Gallien J;Caro F;Correia J;Garcia J;Montes M;Ramos J A;Corredoira J M

Biographies

Jérémie Gallien

Publication Year

2010

Abstract

Overcoming significant technical and human difficulties, Zara recently deployed a new process that relies extensively on sophisticated operations research models to determine each inventory shipment it sends from its two central warehouses to its 1,500 stores worldwide. By taking a retail size-assortment view of a store's inventory, the model incorporates the link between stock levels and demand to select store replenishment quantities. Through a rigorous, controlled field experiment, we estimate that this new process has increased sales by 3–4 percent; this corresponds to estimated profits of approximately $233 million and $353 million in additional revenues for 2007 and 2008, respectively.

Keywords

Retailing; Fast fashion; Inventory management; Field experiment; Sizes distribution

Available on ECCH

No


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