Piling and Discounting Perishable Products: Optimal Replenishment and Discounting Policy for Perishable Products

Oncu Hazir, Xinghao Yan and Maher Agi
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Oncu Hazir: ESC [Rennes] - ESC Rennes School of Business
Xinghao Yan: University of Toledo
Maher Agi: ESC [Rennes] - ESC Rennes School of Business

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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.

Date: 2024
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Published in European Journal of Industrial Engineering, 2024, 18 (2), pp.1. ⟨10.1504/EJIE.2024.10053955⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-04345356

DOI: 10.1504/EJIE.2024.10053955

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