Should you drop the slow line?

Dropping a slow line is easy arithmetic until you ask where its shoppers go. The tree prices the branch nobody puts in the spreadsheet, which is the group who take the whole basket somewhere else.

Operations Intermediate Decision Tree Pro engine

Install free How decision trees work

After you install, this is the model to open.

Should We Drop This Line?

In your spreadsheet, click the Sortia icon in the strip of icons down the right-hand edge. No strip? Click the arrow at the bottom-right to open it. You can also use Extensions, then Sortia, then Open Sortia.
Click Start from a template and put that name in the search box.
Pick the card with that name and click Load this template. It arrives on a new tab with real numbers already in it.

This one runs on a Pro engine, and every free install includes five full-quality runs on your own numbers, shared across all five Pro engines rather than five for each. After that, Pro is $199/year.

The answer

Drop the line: $140,550 expected value, against $113,550 for keeping it
The edge: $27,000 a year, for the same bay
What you accept: $74,000 15% of the time a core group walks
The good case: $165,000 45% of the time the switch just works

A declining line in a bay that makes $118,000 of gross profit a year, against a growing line that makes about 40% more per facing. The easy version of this decision is a subtraction and it always says drop. This tree asks the harder question, which is where the shoppers go. Click Run. Dropping the line comes back at $140,550 against $113,550 for keeping it, so dropping is worth about $27,000 a year.

The risk profile shows what you are accepting to get it: the good case is $165,000, the middle case is $138,000, and 15% of the time a core group takes its whole basket elsewhere and the bay makes $74,000, which is worse than any of the three keep outcomes including the one where the decline simply carries on. That branch is the entire decision.

Everything else in the tree is arithmetic a category review already does. So test it directly. Hold the other two drop outcomes in the same proportion to each other and raise the chance of the walk-away case: at 30% dropping is still comfortably ahead, at about 49% the two options are level, and above that keeping wins. You would have to believe that half the buyers of a declining line would leave the store over it before keeping becomes the right call, and almost nobody believes that when they say it out loud.

That is a reassuring answer and it is worth having as a number rather than as a feeling. Two things the tree does not price. These are annual gross profit figures, so it says nothing about the one-off cost of resetting the bay, the supplier relationship you spend, or the markdown on the stock you are left holding, and all three land in the first quarter.

And it has no view of a supplier who also supplies four lines you want to keep. To make it yours, put your own bay gross profit on the keep branch, take the growing line rate of sale per facing from a store that already ranges it, and set the walk-away probability from your own loyalty data by counting how many buyers of this line buy nothing else you sell.

The model

It arrives on a tab called Template: Drop the Line?, carrying these columns:

ID
Parent
Type
Label
Probability
Value ($k)

Once it is in your sheet

The model arrives with real numbers in it and runs as it stands, so you can press the button first and understand it second.
Change the numbers to yours. The sheet marks which cells are inputs and which hold formulas, and most labels carry a note explaining the row.
Press the run button at the bottom of the panel. It is labeled for the tool you are in, and the result lands on its own tab, with a written reading of it beside the figures.

Never used Google Sheets? Start here goes the whole way, in seven steps, and assumes nothing.

Next question

Every model like this one, and the method behind them: Decision trees.

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