What can O.R. do for you?

O.R. Inside Your Shopping

Inside Birmingham Bullring

When you hand over your reward card at a supermarket checkout, the store captures details of exactly what you have bought, and when you bought it. Very detailed and potentially valuable information, which can be used to help the supermarket give you better service by ensuring that the things you want to buy are in stock when you want to buy them, and to keep costs down by making orders placed with suppliers more accurate and thus minimising the amount of food unsold at the sell-by date.

Sounds simple? Not really: in fact it's very complicated and requires a lot of know-how. To begin with, there's the sheer volume of data - hundreds of millions of items purchased every week, and it takes some pretty clever programing to enable even today's most powerful computers to handle such a lot of data efficiently and quickly enough for the analysis to be useful. Even trickier is the problem of making sense of the data. There are some things like bread or milk that you probably buy every week, though perhaps you like to vary the kind of loaf you get, and maybe you don't always buy the same quantity of milk. Other items you probably buy only occasionally, or once in a lifetime. So the supermarket needs to try to work out what kind of loaf you're likely to want in any week, how much milk, when you'll next purchase one of your occasional items, and which are your once in a lifetime buys. It also needs to work out when, in any week, you're likely to buy various things - possibly taking into account things like the weather. Not simple at all, when you think about it!

To deal with these problems your shopping has O.R. inside. Powerful analytical methods are used to look for patterns in the data, the idea being that to the extent that your shopping follows a pattern, it is predictable. In practice, everybody's shopping is part pattern (probably more so than most of us realise) and part random, or unpredictable. To the extent that there is a pattern the store can order supplies to meet your requirements; to the extent that your shopping is random, they won't always get it right.

Because there's O.R. inside your shopping, supermarkets today can set the required stock level of every item much more accurately than they could in the past, whilst also providing better service. Part of this process allows stores to calculate accurately how much shelf space to allocate to each product. This means they can offer customers a wider choice (because each item takes up less shelf space) and keep costs down (because goods don't sit on the shelves for as long as they used to, so each shelf earns more money). And that's not all. There are many other ways in which there's O.R. inside your shopping, from deciding the store's location to scheduling the lorries that deliver to it.

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