OPTIMUS: Optimization Productivity Tool for Intelligent Management of Utilizable Space

TL;DR

OPTIMUS is a scalable, profit-driven retail space management tool that uses exact optimization methods to improve sales and margins by efficiently allocating limited space among planograms.

Contribution

It introduces a linear binary knapsack model and dynamic programming for exact assortment decisions, integrated into a mixed-integer bay optimization framework.

Findings

Achieved an average sales lift of 11.8%.

Achieved an average margin lift of 9.5%.

Provided a scalable and interpretable solution.

Abstract

We study department-level retail space optimization, where limited bay capacity must be allocated among planograms (POGs) under business and operational constraints. The problem is formulated as a linear binary knapsack model, with potential SKUs treated as items characterized by space requirements and weighted value contributions from sales, margin, units, and assortment similarity. Dynamic Programming (DP) is employed to obtain exact and reproducible assortment decisions in O(nc) time, avoiding the variance inherent in heuristic approaches. These decisions are integrated with a second-stage bay optimization model formulated as a mixed-integer program. Evaluated end-to-end across ten optimization runs spanning multiple departments and store clusters, the OPTIMUS framework achieves an average sales lift of 11.8% and an average margin lift of 9.5%. Overall, OPTIMUS provides a scalable, interpretable, and profit-driven solution for enterprise-scale retail space management.