Piling and discounting perishable products: optimal replenishment and discounting policy for perishable products

Maher A.N. Agi, Xinghao Yan and Öncü Hazir

European Journal of Industrial Engineering, 2024, vol. 18, issue 2, 225-241

Abstract: Retail stores often display large quantities of perishable products that they sell at full price over a given period and then at a discount until the end of the inventory cycle. We investigate this common practice by considering a product which is subject to continuous decay through time. The demand is a function of both the price of the product and the inventory level. The retailer may discount the product once during the cycle. Closed-form expressions were provided for the maximum discounting time and cycle time. The conditions under which an optimal discount policy exists were established. The results provide insights to decision-makers on how to design a markdown policy for perishable products. [Received: 9 November 2021; Accepted: 31 December 2022]

Keywords: inventory management; perishable product; discount; markdown policy; inventory-level-dependent-demand. (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:ids:eujine:v:18:y:2024:i:2:p:225-241

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