Dynamic pricing and production control for perishable products under uncertain environment

Ruishu Shi () and Cuilian You ()
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Ruishu Shi: Hebei University
Cuilian You: Hebei University

Fuzzy Optimization and Decision Making, 2023, vol. 22, issue 3, No 2, 359-386

Abstract: Abstract In actual dynamic system, uncertainty is absolute and certainty is relative. This paper presents the optimal dynamic pricing and production control strategy for perishable products in finite horizon. The influence of external environmental disturbance on the system is considered by means of a special uncertain process (Liu process). Then based on uncertainty theory and Hurwicz criterion, the optimization model is built, where control variables are restricted to an admissible control set. In addition, uncertain differential equation is used to describe the changes of inventory. By applying the optimality equation, we determine the optimal price and production strategy to maximize profit. Besides, both the optimal price and production rate are linearly decreasing with inventory. Afterwards, two numerical examples are given, the results reveal that reducing the uncertain disturbance of inventory and expanding the potential market size are beneficial to improving the optimal profit. Moreover, risk-loving decision makers can gain more profits while facing large risks.

Keywords: Hurwicz criterion; Dynamic pricing; Production control; Uncertainty theory; Perishable products (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1007/s10700-022-09396-x

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