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

Authors: Maher A.N. Agi; Xinghao Yan; Öncü Hazir

Addresses: Rennes School of Business, 2 Rue Robert D'Arbrissel – CS 76522, 35065 Rennes, France ' Neff College of Business and Innovation, University of Toledo, 2801 W. Bancroft St., Toledo, OH 43606, USA ' Rennes School of Business, 2 Rue Robert D'Arbrissel – CS 76522, 35065 Rennes, France

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.

DOI: 10.1504/EJIE.2024.137038

European Journal of Industrial Engineering, 2024 Vol.18 No.2, pp.225 - 241

Accepted: 31 Dec 2022
Published online: 01 Mar 2024 *

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