Markdown Optimization via Approximate Dynamic Programming

Özlem Coşgun*, Ufuk Kula, Cengiz Kahraman

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

6 Citations (Scopus)


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 languageEnglish
Pages (from-to)64-78
Number of pages15
JournalInternational Journal of Computational Intelligence Systems
Issue number1
Publication statusPublished - Feb 2013


The authors would like to Scientific & Technological (TUBITAK), for supporting Project No. 107M257.

FundersFunder number
Scientific & Technological


    • Approximate Dynamic Programming
    • Cross-price elasticity
    • Markdown optimization
    • Multinomial logit model
    • Pricing


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