Introduction

Grocery retailing is a highly competitive market (e.g. Keh and Park 1997). European retailers are continuously aiming to improve customer loyalty by offering good service. At the same time, they are struggling to reduce costs in order to stay competitive. The effort to achieve customer service excellence has only been partly successful, as the low average product shelf availability rates of 92–95% (Gruen, Corsten et al. 2002; Roland Berger 2003b) and a sunk store loyalty underline. The major part of retailer costs are personnel costs, and in particular it is the operations in the store that require intensive staff dedication (Broekmeulen, van Donselaar et al. 2004a). The German retailer Globus has calculated that the logistics costs of the last 50 meters in the store, i.e. from the backroom to the shelf, are three times as expensive as the first 250 kilometres from the producer to the store gate (Shalla 2005). A technique that promises to reduce the out-of-stock (OOS) rate by simultaneously reducing the store handling costs are so-called automatic store replenishment (ASR) systems, the main research subject of this thesis.