Price reductions on stocks with decreasing demand

This paper proposes a heuristic approach for the minimization of losses on stocks with decreasing demand and unknown time horizon. The two proposed methods make use of an approximate demand curve for forecasting expected losses. Both heuristics use this forecast in order to determine when the price of items in stock should be reduced, in order to accelerate sales so as to avoid losses due to long turnover times. A case study in which real data from a CD store are simulated, is used to compare the performance of the two heuristics against the current discount strategy of management.