Optimal markdown policies for perishable products with fixed shelf life
Bibliographic record
Abstract
The market for perishable products is subject to short selling seasons and volatile demand. Retailers use strategies such as issuing policies, quality disclosure, and markdown pricing to maximise revenue and reduce waste. Among the markdown options, the best policy is not always clear-cut, as there is a trade-off between the complexity of the policy and the revenue generated. To address this, we introduce a joint model that optimises issuing, quality disclosure, production, and markdown pricing for perishable products with fixed shelf lives and freshness-sensitive customers. We make the first attempt to theoretically and numerically evaluate the effectiveness of different markdown policies, including single-stage, multiple-stage, and dynamic markdown policies. Empirical case studies validate the models, showing that hiding product quality is optimal and the best issuing policy depends on customer freshness sensitivity. We prove that the value of markdown policies asymptotically vanishes as the market demand or customers' maximum willingness-to-pay (WTP) increases. Conversely, the benefits of markdown policies increase when per unit expiration, shortage, and production costs rise. Additionally, while multiple-stage and dynamic markdown policies can significantly benefit the system, in most cases, their benefits over the single-stage policies are insignificant and vanish asymptotically.
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How this classification was reachedexpand
Full frame distilled prediction
Teacher imitationNot calibrated prevalence, not ground truth. Human validation pending. Learned from the 10,348 direct Codex labels and 10,348 direct Gemma labels. Candidate is the union of thresholded teacher heads; consensus is their intersection. These outputs are machine_predicted_unvalidated and are not human labels or direct frontier model labels.
Codex and Gemma teacher scores by category
| Category | Codex | Gemma |
|---|---|---|
| Metaresearch | 0.002 | 0.002 |
| Meta-epidemiology (narrow) | 0.000 | 0.000 |
| Meta-epidemiology (broad) | 0.000 | 0.000 |
| Bibliometrics | 0.001 | 0.001 |
| Science and technology studies | 0.000 | 0.000 |
| Scholarly communication | 0.001 | 0.001 |
| Open science | 0.001 | 0.000 |
| Research integrity | 0.000 | 0.000 |
| Insufficient payload (model declined to judge) | 0.000 | 0.000 |
Machine scores (provisional)
The two teacher heads of the student model, read on this work. A score orders the frame for review; it never asserts a category, and the validation status ships verbatim with every row.
Baseline scores from an immature model (maturity gate not passed, 7 training rounds). Scores rank; they never assert a category.
score_only:v0-immature-baseline · verbatim from the scoring run: score_only means the number may rank works, and no category label ships from itClassification
machine, unvalidatedMachine predicted; a candidate call from one teacher head, not a consensus.
How this classification was reached, model by model and score by score, is at the end of the page under "How this classification was reached".