A Decision-Support System that Helps Retailers Decide Order Quantities and Markdowns for Fashion Goods

Murali K. Mantrala and Surya Rao
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Murali K. Mantrala: ZS Associates, 1800 Sherman Avenue, Evanston, Illinois 60201
Surya Rao: FI Sofex Ltd., 14 Eighth Main Road, Malleswaram, Bangalore, India 560003

Interfaces, 2001, vol. 31, issue 3_supplement, S146-S165

Abstract: We developed MARK, a stochastic dynamic-programming model-based decision-support system, specifically to help retail-store buyers of fashion goods decide on optimal merchandise order quantities and markdown prices. We implemented MARK as an interactive software program that runs on users' personal computers and can be integrated with the retailers' point-of-sale (POS) and other information systems. As we show in an actual-case illustration, MARK improved profitability and managers' understanding of the decision problems. MARK also provides valuable insights into the interplay between order-quantity and dynamic-pricing decisions. For example, higher markdown percentages do not necessarily mean lower profits.

Keywords: MARKETING—RETAILING AND WHOLESALING; PROGRAMMING—DYNAMIC; APPLICATIONS (search for similar items in EconPapers)
Date: 2001
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Citations: View citations in EconPapers (26)

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