Sep
17
Markdown Optimization, from Allen Gillespie
September 17, 2007 |
I was reading CFO magazine and a story on how retailers are becoming more systematic in their application of markdowns. In fact, it mentions Oracles markdown-optimization software. It made me wonder if such strategies could be applied to a list of stocks. It mentions strength of inventory by store and item. It mentions categories by color, size, and style. It mentions optimizing inventory replenishment rates. In an analogy to trading, size and style are easy, but what would constitute location, color, etc..
"the software can monitor sales through the selling season, compare them to non-linear forecasts generated from sales of like items in prior years, look back to historical sales data, and predict how the item will sell fro the remainder of the season. If it looks like the product won't sell out, the software can look at how similar items responded to past marketdowns, then test a variety of pricing strategies to identify the one that will result in sell all the merchandise." [Read More]
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