Computational Strategies for Inventory Liquidation

Abstract

The area of inventory liquidation of consumer products has been revolutionized by retailers adopting direct-to-consumer approaches via the ecommerce stores and online auction sites (Bapna et al. 2009) enabled by advanced information technologies. For example, retailers such as Best Buy have liquidation stores on eBay, and sites such as uBid.com often liquidate previous generation electronics products. One of the key advantages of online platforms is the ability to consolidate inventories across stores and sell them to a wider consumer base that may not be accessible through traditional channels. The challenge of liquidating a large amount of consolidated inventory is in design of liquidation strategies (e.g., over what period of time the inventory should be liquidated and at what prices) given the uncertainty in product valuations. Computational approaches constitute a promising avenue toward either automating or providing support for managerial decision making in inventory liquidation settings.