A study on optimal discount strategy of perishable food in supermarkets

Kimitoshi Sato, Tatsuya Nakamoto, Kenichi Nakashima

Research output: Contribution to journalArticle

Abstract

In this paper, we study the effect of an optimal discount strategy on the total expected revenue for perishable foods. We use an algorithm proposed by Feng and Gallego (1994) to derive the optimal strategy. The parameters that need to obtain the strategy are estimated based on point-of-sale (POS) data. The optimal strategy is obtained so as to maximize the total expected revenue and is based on a threshold model. We show the discount strategy visually and compare the expected revenue under a traditional strategy with that under the optimal strategy proposed. The proposed approach results in an expected revenue increase of 17.4%.

Original languageEnglish
Pages (from-to)77-83
Number of pages7
JournalJournal of Japan Industrial Management Association
Volume69
Issue number2
DOIs
Publication statusPublished - 2018 Jan 1
Externally publishedYes

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Keywords

  • Inventory
  • Point-of-sale
  • Pricing
  • Revenue management

ASJC Scopus subject areas

  • Strategy and Management
  • Management Science and Operations Research
  • Industrial and Manufacturing Engineering
  • Applied Mathematics

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