Pricing to accelerate demand learning in dynamic assortment planning for perishable products
We investigate optimal assortment planning strategies for a retailer with limited shelf space. The retailer can choose among basic and fashion items with low and high risk (and return) respectively. Our motivation is in the apparel industry, and we explicitly model the vogue as a stochastic process that the retailer tries to follow. The objective is to maximize the long‐term value of the retail business by dynamically adjusting the menu of products on display.