Expanding the scope of factors considered in evaluating return on investment can assist front line managers in making realistic decisions about inventory. Several factors that directly account for profitability and are within the purview of front line managers are discussed and means of optimizing their relationships are discussed.
return on investment, gross margin, GMROI, CMROI, inventory, merchandising, retail, strategy, space
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The authors would like to acknowledge Roger A. Kerin and Dwight Grant of Southern Methodist University and Robert Lusch of the University of Oklahoma for their suggestions on an earlier draft of this paper. The authors also thank Roy Clark of Sanger Harris, Dallas; Kent Nichols of Jeske's, Houston; Brian Schroeder of Macy's, Kansas City; and Jay Scher of the National Retail Merchants Association for their data collection assistance.