A Retail Inventory Policy for Time-dependent Cyclical Demand

Fast-moving retail items follow a cyclical demand pattern depending on timing and marketing efforts. In our research, we observe the occurrence of intraday sales patterns. We therefore model an inventory policy accounting for intraday sales patterns by refitting the review period. We include lost sales, inventory holding and handling costs, and marketing efforts. Using actual transaction data, we compare this new policy to current practice, evaluating effects on customer service and total cost.