The research goal of this Faculty Early Career Development (CAREER)project is to develop operations management models that incorporate issues such as product variety, product line selection and pricing. Two problems will be considered: assortment planning and product line selection. In assortment planning, the retailer makes decisions regarding the number of styles of each product to offer and how much inventory to carry. This problem is difficult because of the possibility of substitution between products. Stochastic inventory models that incorporate demand substitution will be developed. In the product line selection problem, the retailer must select a subset of products from a set of potential products and determine the price of each product. This research will take a stochastic approach, assuming preferences of consumers are not known exactly. For both problems, the research will start with stochastic models developed by the Principal Investigator. These models will be extended to consider: (1) shelf-space and/or inventory constraints; (2) demand rates that are a function of the level of product variety; (3) preferences that vary by market segment; and (4) tailers/manufacturer coordination. The educational goal of this CAREER development plan is to expand the educational experiences of students to include issues of importance to the service sector, such as supply chain management. The educational plan consists of three components: a graduate course in supply chain management; graduate student research projects on the problems described; and undergraduate research opportunities.<br/><br/>If successful, this research will lead to the development of models and decision rules for addressing the joint product line selection, pricing and inventory management problem. These models will provide easily implementable decision rules that can be used by retailers to improve their management of product variety, allowing retailers to reduce inventory levels while satisfying a variety of customer preferences. In addition, these models will provide useful insights into the value of retailer/manufacturer coordination in managing product variety.