Optimal pricing model for non-instantaneous deterioration items with price and freshness sensitive demand under the e-commerce environment in China

Abstract

PurposeThe purpose of this paper is to focus on determining the optimal sales price for non-instantaneous deterioration items according to consideration of freshness and demand.Design/methodology/approachIn this model, the authors have described the demand function which is dependent on price as well time. The products that the deterioration is considered as non-instantaneous have a determinate shelf life, and their demand rate will decrease over time after the beginning of the selling period. This paper depicts that the total profit of non-instantaneous deterioration items using the dynamic pricing strategy is higher than that using fixed pricing strategy.FindingsFinally, to illustrate and validate the model, the authors have used some numerical examples. A new freshness function and the model to study pricing policy are developed as well applied to solve managerial decision problems.Originality/valueThis paper complements the lack of the existing theoretical research of pricing for non-instantaneous deterioration items under an e-commerce environment. A new freshness function and the model to study pricing policy are developed as well applied to solve managerial decision problems.