Markdown strategy for a game!
In the retail business, revenue management includes budgeting, product pricing, and demand forecasting, as well as tactics for implementing markdowns and determining where initial prices should be dropped to improve sales over time. The first known strategy is promotional discount, which are usually short and targeted at certain client segment. Nonetheless, we are interested in a second strategy, which is called a markdown. The latter occurs when a merchant permanently reduces the price of a product with the goal of maximizing revenue. This technique is used as overbuying is a constant dilemma in the retail business, and markdowns solve this problem while also increasing income.
The retailer manager is responsible of selling 2,000 brand-new trendy wear products. Ultimately, the objective is to determine the most profitable pricing approach. The item's list price is $60, and it must be sold for at least one week at that price. Following that, the item may be lowered to $54 (a 10% discount), $48 (a 20% discount), or $36 (a 40% discount). The price cannot be raised after it has been reduced. The markdown season lasts 15 weeks, thus additional goods cannot be purchased during the sales season due to extensive production wait times. At the conclusion of the sales horizon, any things that remain will be disposed at a cost of $0.
To play this game, follow the link below: http://www.randhawa.us/games/retailer/nyu.html The Retail Markdown Game is used in this research to determine the best strategy to handle markdowns by experimenting with different algorithms/approaches. An excel file was provided to us (Sales-Data.xlsx) and contains historical data to help us build a strategy.
**Report Structure: **
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Introduction
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Data Discovery
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Testing our strategies
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Baseline approaches
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Dynamic Approaches
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Final Strategy and Future Improvements
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Appendix