Question

Question 1) Answer the following open ended parts

Part A) In the space below, list the constraints that must be included in a markdown optimization model.

Part B) In the space below, explain when partitioning prices leads to an increase in preferences for a product and when it leads to a decrease in preferences for a product.

Part C) Fashion items are good candidates for markdown pricing. Give an example of a product that is a good candidate for markdown pricing (other than fashion items). For this product, list THREE specific assumptions of markdown pricing that this product satisfies.

Answer 1

Answering the first question as per Chegg Guidelines:

1. The constraints which must be included in a markdown optimization model, to enhance its overall effectiveness and accuracy, are as follows:

· Limit on the frequency of the markdown based on its size

· Distinct inventory level to be maintained as prescribed by client

· Quality adherence of the products in the markdown

· The permissible markdown budget