zara
Research papers Zara :
A. Clearance Pricing Optimization for a Fast-Fashion Retailer
Summary:
The research paper ‘Clearance Pricing Optimization for a Fast-Fashion Retailer’ talks about how Zara has increased its clearance revenues by approximately 6% by following a price optimization model.
Zara uses minimal in-season promotions and offer continuous changing styles. However they were facing clearance pricing problem because it involved comparatively more different styles of unsold inventory with less historical price data points. Till 2007 they used manual and informal decision making process for determining price markdowns. But then by collaborating with its pricing team they implemented a formal forecasting model feeding a price optimization model. They selected Belgian and Irish stores for experimenting with the selected price optimization model for the 2008 Fall-winter season. This new process increased the clearance revenue by 6% and there after Zara has been using this process worldwide for its markdown decisions during clearance sales.
B. Zara Uses Operations Research to Reengineer its Global Distribution Process
Summary:
Zara has around 1,500stores worldwide and distributing them on the timely basis is very important. Thus to overcome any technical and human difficulties they developed new processes which made extensive use of operations research models to determine the amount of inventory shipment to its worldwide stores through its two central warehouses. By the use of EDI the models decide the safety stock line for each of the stores and then decide when to send in the replenishment quantities. By conducting controlled field experiment the company is estimating profits of approximately $233 million and $353 million in additional revenues.
A. Clearance Pricing Optimization for a Fast-Fashion Retailer
Summary:
The research paper ‘Clearance Pricing Optimization for a Fast-Fashion Retailer’ talks about how Zara has increased its clearance revenues by approximately 6% by following a price optimization model.
Zara uses minimal in-season promotions and offer continuous changing styles. However they were facing clearance pricing problem because it involved comparatively more different styles of unsold inventory with less historical price data points. Till 2007 they used manual and informal decision making process for determining price markdowns. But then by collaborating with its pricing team they implemented a formal forecasting model feeding a price optimization model. They selected Belgian and Irish stores for experimenting with the selected price optimization model for the 2008 Fall-winter season. This new process increased the clearance revenue by 6% and there after Zara has been using this process worldwide for its markdown decisions during clearance sales.
B. Zara Uses Operations Research to Reengineer its Global Distribution Process
Summary:
Zara has around 1,500stores worldwide and distributing them on the timely basis is very important. Thus to overcome any technical and human difficulties they developed new processes which made extensive use of operations research models to determine the amount of inventory shipment to its worldwide stores through its two central warehouses. By the use of EDI the models decide the safety stock line for each of the stores and then decide when to send in the replenishment quantities. By conducting controlled field experiment the company is estimating profits of approximately $233 million and $353 million in additional revenues.