IE 4906 Special Topics in IE: Retailing Management
Instructor: Özgen Karaer, IE 209, okaraer@metu.edu.tr, Phone: 210 2279
Assistant: Gökçe Özkan, IE 138, ogokce@metu.edu.tr, Phone: 210 4697
Class time & place: Wednesdays 13.40-16.30 @ IE 105
Course webpage: https://metuclass.metu.edu.tr/
Course objective: With this course, the students are expected to:
 To learn the specifics of retail practice, understand the main problem areas in retailing management,
and analyze the retail industry from a system perspective.
 To understand the impact of effective supply chain management on retail business performance, and
link it to customer preferences and financial targets.
 To develop solutions for issues in retail practice by leveraging theory and previously-learned tools in
the IE discipline (i.e. inventory planning and control, logistics, statistical analysis, optimization, and
etc.) to impact the business performance.
 To be able to leverage data to inform operational and tactical decisions in retail, and connect strategic
decisions with tactical and operational consequences/challenges.
 To develop the necessary background for a career in (i) retailing and retail supply chains, (ii)
businesses like consulting and information technology that provide services to retailers, and (iii) brand
manufacturers that reach the end consumer through retailers.
Prerequisite: IE 323
Course credit: (3-0)3
Course Textbook: Levy, M. and B.A. Weitz, Retailing Management, 8th Edition, McGraw Hill, 2012.
References:
 Fisher, M. and A. Raman, The New Science of Retailing, Harvard Business Press, 2010.
 Nahmias, S., Production and Operations Analysis, 6th edition, McGraw-Hill, Irwin, 2008.
 Porteus, E.L., Foundations of Stochastic Inventory Theory, Stanford University Press, 2002.
 Zipkin, P., Foundations of Inventory Management, McGraw-Hill, Irwin, 2000.
 Kotler, P. and K.L. Keller, Marketing Management, Pearson, 14th Edition, 2012.
 Ghemawat, P. and J.L. Nueno, “Zara: Fast Fashion,” Harvard Business School Case, 2006.
 Hammond, J., “Amazon.com’s European Distribution Strategy,” Harvard Business School Case, 2005.
 Sasser, W. E., “Benihana of Tokyo,” Harvard Business School Case, 2004 (rev).
 Walker, R. and M. Jeffery, “Netflix Leading with Data: The Emergence of Data-Driven Video,”
Kellog School of Management Case, 2010.
Grading: Evaluation of students will be based on
- Homework assignments (3) (20% )
- Class participation & pop-quizzes (10+) (15%)
- Case Studies (4) (25%)
- Final (40%)
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Course Outline:
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Content
Introduction and Types of Retailers.
Challenges and opportunities in retailing; Retailer characteristics – food retailers vs.
general merchandise retailers; services vs. merchandise retailers; category specialists
and extreme-value retailers; flash-sale retailers.
Customer Buying Behavior and Market Segmentation
Customer buying behavior, types of buying decisions, market segmentation & the
Hotelling Model
Retail Business Models
Traditional apparel retail vs. fast-fashion. Traditional grocery retail vs. discount
stores.
Assortment Planning (Benihana Case)
Merchandise hierarchy; developing an assortment plan; assortment productivity –
breadth vs. depth of inventory; sell-through analysis. Category management.
Benihana case will be discussed.
Supply Chain Management – Store Inventory Management
Store vs. distribution center inventory policy and optimization. Replenishment from
DC to stores. Smart allocation and replenishment systems.
Supply Chain Management – Logistics
The DC capacity, inventory, and delivery frequency tradeoffs. Reverse logistics.
Supply Chain Management – Strategy (Amazon Case)
Total supply chain strategy tradeoffs. Impact of opening a new DC. Sales planning:
top-down vs. bottom-up process.
Amazon European Distribution case will be discussed.
Supply Chain Management – Operational Metrics and RFID
How do you measure productivity? Service level, in-stock, GMROI, store deviation,
AUR, store unit GM deviation, average inventory, inventory shrinkage, and etc. How
does RFID influence operations of a retailer?
Financial Strategy and Linking Finance to Operations
Cash-flow analysis; dept-equity ratio. The link between financial performance and
inventory management.
Promotions, Pricing and Markdown Management (Zara Case)
Yield management; customer price sensitivity vs. competition; markdown
management; initial price and markdown optimization; price discrimination; traffic
management.
Zara case will be discussed.
Promotions, Marketing, and Customer Relationship Management
Traffic vs. sales relationship. Direct vs. online marketing activities. Promotion impact
and ROI analysis. Social networks.
Retail Locations, Malls, and Strategy
Real estate planning as a retail strategy; estimating potential sales for a store site and
evaluating a site.
Multi-channel Retailing and E-tailers (Netflix Case)
Retail channels. Manufacturer as a direct competitor; challenges of effective
multichannel retailing; competition with an e-tailer.
Netflix case will be discussed.
Collaboration with Partners (VMI, Forecast Information Sharing, and etc.)
Vendor-managed inventory; forecast information sharing; joint marketing efforts;
markdown money.
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Case Write-ups: All case write-ups will be done individually and will be due to the class scheduled for the
discussion of the particular case. Case write-ups will be in the form of answers to the listed questions regarding
the case.
Hard copies of the case will be distributed to the students in class, and the list of case questions will be
available to the students at least a week ahead of the due date.
The required format of case write-ups:
- Calibri, 11pt in MS Word with standard margins
- Concise and clear sentences
- No more than 5 pages
Class Participation: Students are expected to participate in the discussions in the class. Quality of comments
as well as the frequency of participation will be taken into account in forming the class participation grade.
Relation to Program Outcomes: This course contributes to the following program outcomes:
 b. The students will be able to design and conduct scientific experiments, as well as to analyze and
interpret data.
 c. The students will be able to design a system, component, or process to meet desired needs.
 e1. The students will be able to identify and formulate industrial engineering problems.
 e2. The students will be able to generate creative and meaningful solution and design alternatives for
industrial engineering problems.
 g. The students will be able to effectively communicate.
 k. The students will be able to make effective use of scientific methods and tools (such as
mathematical models, statistical methods and techniques) necessary for industrial engineering practice.
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