You are in charge of selling 2,000 items of a brand new fashion apparel. Your goal is to select the optimal pricing strategy to maximize revenues. The list price of the item is $60, and it must be sold at the list price for at least one week. After this, the item may be discounted to $54 (a 10% discount), to $48 (a 20% discount), or to $36 (a 40% discount). Once lowered, the price may not be increased.
The sales season is 15 weeks long. Production lead times are long enough that additional items cannot be procured during the sales season. All items remaining at the end of the sales horizon will be salvaged at $25 a piece. You may consider the historical demand data as you make your pricing decisions.
| Week | Price | Sales | Remaining Inventory |
|---|
Created as a teaching tool by R. S. Randhawa
Based on the game by D. Joneja and M. Broadie