2026-09-20T08:39:52Zhttps://dspace.mit.edu/server/oai/requestoai:dspace.mit.edu:1721.1/591802022-01-28T15:44:52Zcom_1721.1_7582com_1721.1_7581col_1721.1_131023
Chris Caplice and Felipe Caro.
Verdugo, Orietta Parra
Leaders for Global Operations Program.
Leaders for Global Operations Program at MIT
Massachusetts Institute of Technology. Engineering Systems Division
Sloan School of Management
2010-10-12T18:03:25Z
2010-10-12T18:03:25Z
2010
2010
http://hdl.handle.net/1721.1/59180
659787934
Thesis (M.B.A.)--Massachusetts Institute of Technology, Sloan School of Management; and, (S.M.)--Massachusetts Institute of Technology, Engineering Systems Division; in conjunction with the Leaders for Global Operations Program at MIT, 2010.
Cataloged from PDF version of thesis.
Includes bibliographical references (p. 83-86).
There is an essential need in the retail industry, of integrating inventory planning and pricing strategies. In the fast-fashion world of retail, inventory is treated as a perishable item leading to short selling periods. It is a common practice for retailers to liquidate unsold merchandise via clearance markdown policies. Joint marketing and production decisions are important and challenging in retailing. Clearance sales depend on the pricing, seasonal effects, and the assortment of goods available to the customer. Errors in inventory distribution and clearance pricing result in loss of potential revenue or excess inventory to be salvaged. In the case of Spanish-based retailer Zara, thirteen percent of annual revenues are attributed to clearance sales. To maximize these revenues a supply chain tool is designed to facilitate the inventory distribution decisions for the clearance season while considering price markdowns. A two part linear optimization model considers the demand forecast, pricing decisions, and logistic costs in determining the allocation of excess inventory. The business case is very similar to other retailers where revenues need to be maximized. However, Zara's business model and vertically integrated supply chain makes this case very unique. In a forecast error comparison test, the proposed solution improved the forecast error from 8 to 4 percent in respect to the current forecast process.
by Orietta Parra Verdugo.
S.M.
M.B.A.
88 p.
eng
Massachusetts Institute of Technology
M.I.T. theses are protected by
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http://dspace.mit.edu/handle/1721.1/7582
Sloan School of Management.
Engineering Systems Division.
Leaders for Global Operations Program.
Coordination of inventory distribution & price markdowns for clearance sales at Zara
Thesis
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Publication
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<Abstract>There is an essential need in the retail industry, of integrating inventory planning and pricing strategies. In the fast-fashion world of retail, inventory is treated as a perishable item leading to short selling periods. It is a common practice for retailers to liquidate unsold merchandise via clearance markdown policies. Joint marketing and production decisions are important and challenging in retailing. Clearance sales depend on the pricing, seasonal effects, and the assortment of goods available to the customer. Errors in inventory distribution and clearance pricing result in loss of potential revenue or excess inventory to be salvaged. In the case of Spanish-based retailer Zara, thirteen percent of annual revenues are attributed to clearance sales. To maximize these revenues a supply chain tool is designed to facilitate the inventory distribution decisions for the clearance season while considering price markdowns. A two part linear optimization model considers the demand forecast, pricing decisions, and logistic costs in determining the allocation of excess inventory. The business case is very similar to other retailers where revenues need to be maximized. However, Zara's business model and vertically integrated supply chain makes this case very unique. In a forecast error comparison test, the proposed solution improved the forecast error from 8 to 4 percent in respect to the current forecast process.</Abstract>
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