Joint Ordering, Pricing, and Freshness-Keeping Policy for Perishable Products: Single-Period Deterministic Case

摘要

Since the deterioration process can be controlled by freshness-keeping efforts, we study the joint freshness-keeping, ordering, and pricing problems for perishable inventory systems. This problem is modeled as a series of nonlinear programming for different cases, from which the optimal single-period freshnesskeeping, ordering, and pricing policies are derived analytically by using the Kuhn-Tucker condition. Then, an algorithm is proposed to implement the policies in real time with little computational efforts. We find a criterion function to evaluate whether it is appropriate to employ freshness-keeping effort. In some scenarios where products deteriorate at a high rate, the freshness-keeping policy depends on the inventory level and has a piecewise structure. When the inventory level is not too high or too low, it is appropriate to employ freshness-keeping effort; otherwise, it is not. The pricing decreases in inventory items, and finally, reach a constant. The order policy has (s, S)-type structure. Based on the solution of the single-period problem, we investigate the stochastic problem over an infinite horizon, where the randomness in both demand and deterioration processes is considered. For the stochastics case, approximately dynamic programming is employed to obtain a joint near-optimal policy. Finally, sensitive analysis for some key parameters is conducted to evaluate their impacts on the joint policy and effectiveness of the algorithm, based on which some insights are revealed for the inventory management of perishable systems.Note to Practitioners-The research reported in this article will be very helpful to inventory management of perishable products, such as fruits and vegetables, which are very closely related to our daily life. A joint optimization of price, ordering quantity, and freshness-keeping efforts will satisfy the demand not only in correct quantity but also in good quality. The optimal joint pricing, ordering, and freshness-keeping policy for a single period is easy to implement and consumes little computational efforts based on the mathematic analysis, which can guarantee its feasibility in real-life retailing systems. Moreover, it will become a foundation of realizing joint optimization of price, ordering quantity, and freshness-keeping effort over the infinite horizon and under randomness, which will have a broader application area.