Reallocating Navy exchange space to maximize profit
Johnson, William Earl
Owens, Joseph F.
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This thesis explores space allocation as a management tool available to Navy Exchanges. A theoretical approach to determining the most economic distribution of space to items sold in a retail outlet is presented. The theory evaluates the changes in marginal gross profits that occur when space changes are made. When all of the marginal gross profits are equal, space utilization is maximized. A technique in linear programming is presented that would assist in equating marginal gross profits. Operational information relating to the retail departments in Building 301of the Monterey Exchange is used to evaluate the strengths and weaknesses of the approach in an Exchange environment. An overview of the attitudes concerning space held by five Monterey Peninsula retailers, and excerpts from an Exchange-wide space utilization survey are presented.
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