Describe the LP optimizer in Price Markdown Optimization.

Describe the LP optimizer in Price Markdown Optimization.medium

Type: scenario
Topic: the-lp-optimizer-in-price-markdown-optimization
Frequency: common
Tags: machine-learning, describe, the, optimizer, price, markdown

Answer

The LP takes demand forecasts as input and optimizes markdown percentage per SKU-brand pair to minimize revenue loss while clearing inventory before end-of-life.

Explanation

The LP takes demand forecasts as input and optimizes markdown percentage per SKU-brand pair to minimize revenue loss while clearing inventory before end-of-life. Constraints: minimum margin floors, maximum markdown caps, inventory depletion deadlines. Objective: maximize recovered revenue subject to sell-through constraints. Implemented with scipy.optimize or PuLP.

Follow-upWhat tradeoffs did you consider in that implementation?