Abstract
We consider the markdown optimization problem faced by the leading apparel retail chain. Because of substitution among products the markdown policy of one product affects the sales of other products. Therefore, markdown policies for product groups having a significant crossprice elasticity among each other should be jointly determined. Since the state space of the problem is very huge, we use Approximate Dynamic Programming. Finally, we provide insights on the behavior of how each product price affects the markdown policy.
Original language | English |
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Pages (from-to) | 64-78 |
Number of pages | 15 |
Journal | International Journal of Computational Intelligence Systems |
Volume | 6 |
Issue number | 1 |
DOIs | |
Publication status | Published - Feb 2013 |
Funding
The authors would like to Scientific & Technological (TUBITAK), for supporting Project No. 107M257.
Funders | Funder number |
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Scientific & Technological | |
TUBITAK | 107M257 |
Keywords
- Approximate Dynamic Programming
- Cross-price elasticity
- Markdown optimization
- Multinomial logit model
- Pricing