Joint shelf design and shelf space allocation problem for retailers

•A mismatch between product shape and rack dimensions can cause suboptimal planograms.•Existing approaches consider that the shelves on a planogram as fixed length, which is limiting.•We propose a novel model that jointly determines the shelf dimensions and product allocations.•Two metrics are introduced to quantify product variation and space fitness.•A novel decomposition-based approach using particle swam optimization and constraint programming is proposed.•Key insights are derived from testing of our approach on realistic data; 35,139 planograms from 109 retail stores and 32,399 unique products.•A case study that optimizes a real planogram at a nearby store is also presented to illustrate the usefulness of our approach.