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

Author

Listed:
  • Oncu Hazir

    (ESC [Rennes] - ESC Rennes School of Business)

  • Xinghao Yan

    (University of Toledo)

  • Maher Agi

    (ESC [Rennes] - ESC Rennes School of Business)

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.

Suggested Citation

  • Oncu Hazir & Xinghao Yan & Maher Agi, 2024. "Piling and Discounting Perishable Products: Optimal Replenishment and Discounting Policy for Perishable Products," Post-Print hal-04345356, HAL.
    • Handle: RePEc:hal:journl:hal-04345356
    DOI: 10.1504/EJIE.2024.10053955
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