The Retail Chain Design for Perishable Food: The Case of Price Strategy and Shelf Space Allocation

Yujie Xiao and Shuai Yang
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Yujie Xiao: Jiangsu Key Laboratory of Modern Logistics, School of Marketing and Logistic Management, Nanjing University of Finance and Economics, Nanjing 210046, China
Shuai Yang: School of Economics and Management, Changshu Institute of Technology, Changshu 215500, China

Sustainability, 2016, vol. 9, issue 1, 1-11

Abstract: Managing perishable food in a retail store is quite difficult because of the product’s short lifetime and deterioration. Many elements, such as price, shelf space allocation, and quality, which can affect the consumption rate, should be taken into account when the perishable food retail chain is designed. The modern tracking technologies provide good opportunities to improve the management of the perishable food retail chain. In this research, we develop a mathematical model for a single-item retail chain and determine the pricing strategy, shelf space allocation, and order quantity to maximize the retailer’s total profit with the application of tracking technologies. Then the single-item retail chain is extended into a multi-item one with a shelf space capacity and a simple algorithm is developed to find the optimal allocation of shelf space among these items. Finally, numerical experiments and real-life examples are conducted to illustrate the proposed models.

Keywords: food retail chain; shelf space allocation; perishable food; pricing strategy; quality deterioration (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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