Dynamic pricing in a two-echelon stochastic supply chain for perishable products

Abstract

Supply chain management of perishable products has to use some mechanisms to control the product waste amount. Dynamic pricing and cooperation of the chain members are some mechanisms which mitigate the waste amount. This paper studies the dynamic pricing problem of a perishable product supply chain with one manufacturer, one retailer, and two periods: production and selling periods. The problem considers price markdown policy to manage the total quality-dependent stochastic demand: dividing the selling period into two different terms and offering two selling prices. This paper analyzes the problem heuristically via Stackelberg and cooperation games. Obtained results demonstrate that the cooperation scenario allocates the maximum profits to the chain members and customers due to the least selling prices. Also, in the Stackelberg cases, both members gain higher profits under the manufacturer-led Stackelberg game; however, the retailer-led Stackelberg game represents lower selling prices and the greatest price markdowns which is profitable to customers.