Profit–Quantity Trade-Off Map and Counterfactual Simulation for SKU Portfolio Optimization in Community Pharmacies

Abstract

This study examined whether data-driven SKU portfolio reallocation could improve profitability in a community pharmacy under a fixed-total-quantity condition. Using 24 months of transactional data from Thai Rungrueang Pharmacy Company Limited, the analysis covered 2,696 raw SKU records collected between September 2023 and August 2025. Products were classified into four clusters based on total profit and total quantity: High-Profit/High-Quantity, High-Profit/Low-Quantity, Low-Profit/High-Quantity, and Low-Profit/Low-Quantity. The results showed strong profit concentration. The High-Profit/High-Quantity cluster accounted for 94.84% of total sales and 96.11% of total profit. In comparison, the High-Profit/Low-Quantity cluster contributed an additional 1.92% of profit despite its small share of total quantity. At the branch-month level, gross margin ranged from 41.43% to 51.01%, with a standard deviation of 2.43 percentage points. Reconstructed counterfactual simulation showed that shifting 2.00% of total quantity from below-median-margin SKUs to the top 5.00% most profitable SKUs increased total profit by 2.33% and raised gross margin from 48.48% to 49.18%. A 5.00% shift increased total profit by 5.81% and raised gross margin to 50.20%. These findings indicate that modest portfolio reallocation can improve financial performance without increasing total quantity. The study suggests that community pharmacies may improve profitability by targeting data-driven assortment adjustments rather than relying solely on sales expansion.

Keywords: Profit–Quantity Trade-Off, Counterfactual Simulation, SKU Portfolio Optimization, Community Pharmacy