Markdown Pricing Optimization at Bloomingdale's (A and B)

Do the benefits of a new markdown pricing optimization system outweigh the costs?
Wei Ke, Costis Maglaras, Garrett J. van Ryzin  | Spring 2008
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Bloomingdale's, one of the nation's premier department stores, has just completed a pilot test of ProfitLogic's pricing optimization system. Bloomingdale's CFO believes that automating markdowns could help the retailer improve its gross margins. But the software program has a $1 million license fee, and implementing the system would involve considerable costs and risks. This case puts students in the role of Daniel Gabbay, an analyst in Bloomingdale's finance division, as he reviews the company's sales data and carries out an independent investigation of the results of the pilot test.

Case ID: 070203

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