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Abstract
Retail shelf space allocation remains a central issue in grocery retailing. A literature review
produced many studies on retail shelf space allocation, but none which evaluated shelf space
allocation using three major factors at once: space, vertical height, and price. In this study, shelf
space allocation was modeled from the perspective of a retailer maximizing profit using space,
vertical height, and price. Using benchmarking, the results show how shelf configuration affects
consumer demand and retailer profit. Parameters for the model were based on experience-based
intuition. Although the initial results are not valuable at this point, the method and results create
a rationale and motivation to gather primary data. Once primary data is collected, this
methodology has important applications. First, it develops an understanding of which parameters
are important in determining optimal shelf space configuration. Second, a properly specified
model would determine retailer's profit for specific shelf level configurations.