Joint Pricing and Ordering Problem with Charitable Donations

Nur Ayvaz Çavdaroğlu
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Nur Ayvaz Çavdaroğlu: Department of Business Administration, Faculty of Management, Kadir Has University, 34083 Istanbul, Turkey

Sustainability, 2020, vol. 12, issue 17, 1-18

Abstract: Finding the correct pricing strategy for a product with multiple versions is an issue for retailers from various industries. In this paper, joint pricing and ordering problem is considered for a product that has two versions at each selling period. Two models, namely with or without the donation option, are analyzed and optimality conditions and monotonicity properties of the decision variables are characterized. When demands of products depend on prices of both versions, donating part of old product inventory would be more profitable for the retailer. Moreover, the donation model would result in less wasted inventory, contributing to sustainability and goals of green economy. Analytical results are supported with numerical analysis of a realistic case.

Keywords: joint pricing and ordering; dynamic programming; donations; sustainability; circular economy (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:12:y:2020:i:17:p:6950-:d:404529

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