Maximizing Profits from Periodic Department Store Promotions

Achabal, Dale D.; McIntyre, Shelby; Smith, Stephen A.
December 1990
Journal of Retailing;Winter90, Vol. 66 Issue 4, p383
Academic Journal
Much of the research on promotions to date has been directed toward supermarket trade promotions sponsored by the manufacturer. Department store chains who sponsor their own promotions face a somewhat different set of decisions and generally have greater control over the features and frequency of their promotions. This paper develops a model designed specifically for department store promotions and tests its assumptions on sales data from a major retail chain in the apparel and housewares area. The form of the model allows it to be solved for explicit optimal (profit maximizing) policies regarding price levels, promotion frequency', and inventory level during promotions, which are then illustrated using the sample data.


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