Shelf space optimisation framework

Product inventory and shelf space are a retailers most precious resource
If there is too much inventory it affects store profitability
If there is too less inventory it affects store sales
If the product is not kept in the right shelf it could affect consumers ability to find it
It is estimated that assortment and shelf optimization can lead to 7-15 % improvement in store sales and gross margin
Non aligned shelves could result in
Sub optimal customer experience ( as he could not find the product he/she is looking for )
Increased inventory carrying cost ( as the yield per square feet of retail space is low )

There needs to be a balance between breadth of a category kept and depth of a product category kept
Ex: In retail outlets do they stock breadth : Rice, Soap,Shampoo,Electronics,Stationary or breadth ( Anapoorna rice, taaza rice et )
In a jewellery store do they stock breadth : Diamonds, Gold,Silver or depth : Diamond ring, Gold chains etc

The questions defining the shelf space optimisation problem are as follows

1.Which are the top 5 products which need an increase in share of shelf ?
2. Which are the top 5 products whose shelf space has to shrink ?
3. How much additional shelf should I need for products which need to expand ?
4. How much shelf space should we shrink the space of the products occupying too much shelf space ?
5. Is their a number which quantifies the degree of misalignment ? How does one interpret this KPI ?