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

Author

Listed:
  • Maher A.N. Agi
  • Xinghao Yan
  • Öncü Hazir

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]

Suggested Citation

  • Maher A.N. Agi & Xinghao Yan & Öncü Hazir, 2024. "Piling and discounting perishable products: optimal replenishment and discounting policy for perishable products," European Journal of Industrial Engineering, Inderscience Enterprises Ltd, vol. 18(2), pages 225-241.
    • Handle: RePEc:ids:eujine:v:18:y:2024:i:2:p:225-241
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