Optimal shipment consolidation and dynamic pricing policies for perishable items

Jianxiong Zhang, Jing Lu and Guowei Zhu

Journal of the Operational Research Society, 2023, vol. 74, issue 3, 719-735

Abstract: Considering a firm who operates multiple stores to sell perishable items with limited inventory, we build a multi-location inventory model to explore the optimal dynamic pricing and shipment consolidation policies. The optimal consolidation and continuous-time dynamic pricing policies are obtained by solving the corresponding optimization problem based on optimal control theory. The optimal strategies derived show that the firm should take penetration pricing policy and select a subset of stores with high market potentials. Compared to cases of static pricing and non-consolidation, both dynamic pricing and shipment consolidation policies can enhance the firm’s profitability, while they exert substitutable effects. Furthermore, the heterogeneity of stores, price sensitivity of demands, deteriorating property of items, holding cost and delivery cost all highlight the importance of consolidation. Additionally, the optimal dynamic price exhibits non-monotonicity with respect to deterioration rate and holding cost.

Date: 2023
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1080/01605682.2022.2056529 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:tjorxx:v:74:y:2023:i:3:p:719-735

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/tjor20

DOI: 10.1080/01605682.2022.2056529

Access Statistics for this article

Journal of the Operational Research Society is currently edited by Tom Archibald

More articles in Journal of the Operational Research Society from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().