An Assortment-Wide Decision-Support System for DynamicPricing and Promotion Planning in DIY Retailing

The main objective of this report is to describe a decision-support system for dynamic retailpricing and promotion planning. Our weekly demand model incorporates price, referenceprice effects, seasonality, article availability information, features and discounts. Building onprevious research, we quantify demand interdependencies and integrate the resulting profitliftingeffects into the optimal pricing model. The methodology was developed andimplemented at bauMax, an Austrian Do-It-Yourself (DIY) retailer. Along with the practicalrequirements, an objective function was employed that can be used as a vehicle forimplementing a retailer’s strategy.[...]