Joint optimization of pricing and inventory strategy for perishable product with the quality and quantity loss

Abstract

ABSTRACTThe sale of perishable products is discontinuous in the actual operation of the retail terminal. However, the quantity loss and quality loss of products caused by the deterioration are continuous during the whole-salesday. In view of the above, amathematical model of asingle non-instantaneous deteriorating product with the time-varying freshness is established to research the joint decision problem of the inventory policy and the dynamic pricing for the retailer. Thesalesday is divided into the business hours and non-business hours, and consumers are assumed to be sensitive about the price and the freshness in different periods of time. The results of the numerical examples and sensitivity analysis show that the extending of the preservation period of perishable products and moderately expanding the size of the market contribute to the improvement of profit, which provides some managerial insights for the retailers.