In markdown pricing and inventory optimization, the Predictive Demand Model serves as the critical bridge between historical sales data and prescriptive decision-making.
It provides not just an estimate of how demand responds to price changes, but also the distribution of uncertainty around those estimates — enabling robust stochastic optimization.
graph TD %% Data Sources A[Historical Sales Data] --> B[Predictive Demand Model] A1[Price History] --> B A2[Seasonality Patterns] --> B A3[Promotional Events] --> B A4[Competitor Pricing] --> B
%% Model Components B --> C{Model Selection} C --> D[GLM Family] C --> E[Discrete Choice Models]
About the author
Cyril Noirot
Lead Data Scientist
Freelance data scientist. I design and ship decision systems — forecasting, pricing, marketing measurement, optimization.