Abstract
In this study, an application of green preservation technology to obtain optimal pricing and replenishment policies is developed. The decreasing value in waste is considered along with retailer dynamic promotional and green preservation technology investments under a price-promotion model with ramp-type demand. To maximize total profits, the study aims to clean the environment while simultaneously optimizing selling price, replenishment schedule, order quantity, green preservation technology investment, and dynamic investment rate. Pontryagin’s maximum principle is adopted to obtain the optimal dynamic investment rate for waste reduction. Additionally, simulated annealing, particle swarm optimization, and BAT algorithms are individually applied to obtain an optimal decision for waste reduction via green preservation technology. Results showed that the investment rate in promotion is significantly affected by price changes and that the investment in green preservation technology is affected by the nature of the product. Extensive computational experiments are performed to validate the proposed model. Under Ramp-type demand, price differentiation is more rewarding than the uniform pricing of the retailer. Results demonstrate the significant role of dynamic investment strategy. It has invested more based on the low-price sensitivity in the second period, and the optimal investment follows a reverse trend.
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