Catalog space allocation at the department level

Abstract

In this article we describe empirical and normative rules for the space allocation in catalogs and the underlying assumptions regarding the demand function. Usefulness and limitations of the two approaches for measuring demand response functions are studied from an empirical point of view. The empirical space allocation rule, space as a percentage of profit, seems to be a good starting point and can be improved as the initially rather unstable elasticities are better known.