Abstract
We examine the impact of product variety decisions on an operational measure – unit fill rate – and on sales performance. Results are estimated using weekly data over three years from 108 distribution centers of a major soft drink bottler. Our results show that fill rates are negatively associated with product variety at a diminishing rate. In addition, we examine the total effect of product variety on sales including both the direct effect and the indirect effect through operations performance. The total impact of product variety on sales initially is positive, although at a diminishing rate. However, beyond a certain level, increased product variety actually results in lower sales; that is, “too much of a good thing”. Thus, the findings provide a comprehensive understanding of the impact of product variety on operations and sales performance.
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