Abstract
The mismatch between supply and demand for fresh products and those that can potentially lead to the risk of spoilage has posed huge losses for industrial companies. To reduce the risk of spoilage of fresh products, some firms have attempted to adopt a deep-processing service to alleviate the imbalance. Therefore, we developed a framework to control the spoilage of the product by taking into account the deep-processing service. First, a differential equation for an inventory model of fresh product and deep-processed product that depended on the selling price and the deteriorating rate was developed. Based on this, a profit model for fresh product and the deep-processed product was developed, and the condition of whether the deep-processing service was required was shown by optimization theory. Furthermore, the existence and its uniqueness of such proportion of deep processing and the selling price of the fresh product were proved. Research results showed the deep-processing service acted as a buffer against the mismatch between the supply and demand for the fresh product. Industrial companies should make lower profits but a quicker turnover by setting a lower selling price when both the deteriorating rate and initial freshness level are high, and vice versa.
Highlights
In the past 20 years, the demand for fresh products in China has grown tremendously.According to the Chinese government’s food consumption standards for 2020, the total demand for fresh products was projected to reach 420 million tons [1]
Considering the deterioration rate of the fresh product, the deep-processing service plays a role in alleviating the imbalance between the supply and demand for the fresh product, which will affect the pricing mechanisms of the industrial company, and affect the sales strategies for fresh product
Zhongxin Industrial Company is responsible for planting kiwifruit according to uniform standards, and its annual output of kiwifruit deep-processing service for fresh agricultural products, this study introduced a deep-processing service into a pricing-decision model, and explored the influence mechanism of the deep-processing service on a fresh agricultural product
Summary
In the past 20 years, the demand for fresh products in China has grown tremendously. According to the Chinese government’s food consumption standards for 2020, the total demand for fresh products was projected to reach 420 million tons [1]. We developed a framework by taking into account the deep-processing service, and inventory-decision models for fresh product and deep-processed product that depended on the selling price and the deteriorating rate of the fresh product were established. Considering the deterioration rate of the fresh product, the deep-processing service plays a role in alleviating the imbalance between the supply and demand for the fresh product, which will affect the pricing mechanisms of the industrial company, and affect the sales strategies for fresh product. An industrial company should realize lower profits but a quicker turnover by setting a lower selling price when both the deteriorating rate and initial freshness level are high. Technical proofs are relegated to Appendix A to smoothen the flow of our presentation
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