Create markdown_clearance_cadence.md

Dynamic Pricing/markdown_clearance_cadence.md

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+# Markdown, Clearance & Salvage Cadence
+**Document ID:** PR-MD-003 | **Version:** 4.0 | **Owner:** VP Merchandising Ops
+**Effective:** 2025-01-01 | **Review Cycle:** Annual
+
+## 1. Purpose
+Standardizes markdown timing, clearance tiers, category-specific rules,
+salvage, donation, and financial treatment of markdowns.
+
+## 2. Markdown Lifecycle
+Full Price → Markdown 1 → Markdown 2 → Clearance → Salvage/Donate/Dispose
+(0-60d) (60-90d) (90-120d) (120-180d) (180d+)
+
+
+## 3. Clearance Tiers
+| Tier | Discount | Trigger | Signage |
+|---|---|---|---|
+| MD1 | 15–25% | 60 days no sale | Yellow tag |
+| MD2 | 30–40% | 90 days no sale | Red tag |
+| Clearance | 50–70% | 120 days no sale | Red "Clearance" |
+| Final | 75–90% | 150 days no sale | Red "Final Clearance" |
+
+## 4. Category-Specific Rules
+| Category | Markdown Start | Max Depth | Notes |
+|---|---|---|---|
+| Apparel | 45 days | 75% | Seasonal end-of-season |
+| Electronics | 90 days | 40% | New model transition |
+| Toys | 60 days | 70% | Post-holiday |
+| Grocery (perishable) | 7 days to expiry | 50% | Daily rotation |
+| Grocery (shelf-stable) | 120 days | 30% | Slow movers |
+| Home | 90 days | 60% | Post-season |
+| Seasonal | End of season | 75% | Hard cutoff |
+| Health & Beauty | 120 days | 40% | Regulatory limits |
+
+## 5. Timing Rules
+- Markdowns executed **Monday and Thursday** each week.
+- System-generated markdown list reviewed by Category Manager.
+- Manual markdowns require **Category Manager approval**.
+- Markdowns > 50% require **Buyer + Merch Director approval**.
+- Markdowns > 75% require **VP Merchandising approval**.
+
+## 6. Salvage & Disposal
+| Disposition | Criteria |
+|---|---|
+| Donate | Non-perishable, unopened, within date |
+| Salvage vendor | Damaged, unsellable, recoverable value |
+| Recycle | Packaging, paper, plastic |
+| Dispose | Contaminated, expired, recalled |
+
+Donation partners: Feeding America, local food banks.
+Salvage vendor: Liquidity Services, B-Stock.
+
+## 7. Financial Treatment
+- Markdown expense recognized **at time of markdown**.
+- Shrink from salvage/disposal recognized **monthly**.
+- Markdown reserve accrual: **0.8% of inventory value**.
+- Category P&L impact reviewed monthly by Finance.
+
+## 8. KPIs
+| KPI | Target |
+|---|---|
+| Sell-through at full price | ≥ 70% |
+| Markdown % of sales | ≤ 3.5% |
+| Clearance sell-through | ≥ 85% within 180 days |
+| Salvage recovery rate | ≥ 25% of cost |
+| Donation diversion rate | ≥ 60% of unsellable food |
+
+## 9. Escalation
+- Store: Store Manager
+- Regional: Merch Ops Manager
+- Corporate: VP Merchandising Ops