Flexibility and performance of branch store stock plans for a manufacturer's product line

Abstract

This study examines the sales performance effects of flexibility in the branch store stock plans for a retailer of a manufacturer's product line. Arguably, stock turnover and manufacturer share of product category sales are two sales performance outcomes that are sensitive to this decision variable. The contingency theory of channel coordination implies that branch-flexible planning, although generally an effective policy, may be less effective for a volatile product category—one characterized by relatively greater numbers of line additions and deletions—than for a more stable product category. A simple structural equation model tests and supports these hypotheses using measures based on archival stock planning and sales performance data.