Problem 2 (Markdowns) 50 points

You are a retailer that sells winter jackets. Each year at the start of a new season, you place an order for styles that are currently popular. At the end of the season, you must get rid of these items to make room for summer items. Since they are seasonal and style is specific to the year, there is no reason to hold them until the following winter.

1. Is this an appropriate product to offer a markdown for? Your answer should comment on whether or not it fits each of the necessary criteria (fixed inventory, value decrease in the near future, has a specific time of use, is a fashion item, experiences deterioration, faces obsolescence).
2. Knowing that customers may be strategic and reference prices matter, how should this factor into your decision about whether or not to markdown, when to markdown and how much to markdown? (For example, does the presence of those effects make it better or worse for you to markdown; why? does the presence of those effects inform your decision about when to markdown/announce a markdown; how?)