IDEAS home Printed from https://ideas.repec.org/a/gam/jmathe/v12y2024i9p1289-d1382028.html
   My bibliography  Save this article

Genetic Algorithms Application for Pricing Optimization in Commodity Markets

Author

Listed:
  • Yiyu Li

    (School of Physics and Optoelectronics, Xiangtan University, Xiangtan 411105, China)

  • Qingjie Xu

    (School of Physics and Optoelectronics, Xiangtan University, Xiangtan 411105, China)

  • Ying Wang

    (School of Physics and Optoelectronics, Xiangtan University, Xiangtan 411105, China)

  • Bin Liu

    (School of Physics and Optoelectronics, Xiangtan University, Xiangtan 411105, China)

Abstract

The perishable nature of vegetable commodities poses challenges for superstores, as reselling them is often unfeasible due to their short freshness period. Reliable market demand analysis is crucial for boosting revenue. This study simplifies the pricing and replenishment decision-making process by making reasonable assumptions about the selling time, wastage rate, and replenishment time for vegetable commodities. A single-objective planning model with the objective of profit maximization was constructed by fitting historical data using the nonparametric method of support vector regression (SVR). The study reveals a specific relationship between sales volume and cost-plus pricing for each category and predicts future cost changes using an LSTM model. Combining these findings, we substitute the relationship between sales volume and pricing as well as the LSTM prediction data into the model, and solve it using genetic algorithms in machine learning to derive the optimal replenishment volume and pricing strategy. Practical results show that the method can provide reasonable pricing and replenishment strategies for vegetable superstores, and after careful accounting, we arrive at an expected profit of RMB 22,703.14. The actual profit of the supermarket was RMB 19,732.89. The method, therefore, increases the profit of the vegetable superstore by 13.08%. By optimizing inventory management and pricing decisions, the superstore can better meet the challenges of vegetable commodities and achieve sustainable development.

Suggested Citation

  • Yiyu Li & Qingjie Xu & Ying Wang & Bin Liu, 2024. "Genetic Algorithms Application for Pricing Optimization in Commodity Markets," Mathematics, MDPI, vol. 12(9), pages 1-16, April.
    • Handle: RePEc:gam:jmathe:v:12:y:2024:i:9:p:1289-:d:1382028
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2227-7390/12/9/1289/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2227-7390/12/9/1289/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Ronald W. Ward, 1982. "Asymmetry in Retail, Wholesale, and Shipping Point Pricing for Fresh Vegetables," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 64(2), pages 205-212.
    2. Amirmohsen Golmohammadi & Elkafi Hassini, 2020. "Review of supplier diversification and pricing strategies under random supply and demand," International Journal of Production Research, Taylor & Francis Journals, vol. 58(11), pages 3455-3487, June.
    3. OSITADE, Oriyomi & ADEOSUN, Kehinde Paul & OMONONA, Bolarin Titus, 2021. "Determinants Of Customers Choice Of Retail Outlet For The Purchase Of Fruits And Vegetables," Review of Agricultural and Applied Economics (RAAE), Faculty of Economics and Management, Slovak Agricultural University in Nitra, vol. 24(2), October.
    4. Lita Alita & Liesbeth Dries & Peter Oosterveer, 2021. "Improving Vegetable Safety in China: Does Co-Regulation Work?," IJERPH, MDPI, vol. 18(6), pages 1-16, March.
    5. Fang Qiu & Qifan Hu & Bing Xu, 2020. "Fresh Agricultural Products Supply Chain Coordination and Volume Loss Reduction Based on Strategic Consumer," IJERPH, MDPI, vol. 17(21), pages 1-25, October.
    6. Shuru Zhong & Mike Crang & Guojun Zeng, 2020. "Constructing freshness: the vitality of wet markets in urban China," Agriculture and Human Values, Springer;The Agriculture, Food, & Human Values Society (AFHVS), vol. 37(1), pages 175-185, March.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Islam Hassouneh & Teresa Serra & José M. Gil, 2010. "Price transmission in the Spanish bovine sector: the BSE effect," Agricultural Economics, International Association of Agricultural Economists, vol. 41(1), pages 33-42, January.
    2. Michel Simioni & Frédéric Gonzales & Patrice Guillotreau & Laurent Le Grel, 2013. "Detecting Asymmetric Price Transmission with Consistent Threshold along the Fish Supply Chain," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 61(1), pages 37-60, March.
    3. Piotr Bórawski & Marta Guth & Andrzej Parzonko & Tomasz Rokicki & Aleksandra Perkowska & James William Dunn, 2021. "Price volatility of milk and dairy products in Poland after accession to the EU," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 67(3), pages 111-119.
    4. Richards, Timothy J. & Patterson, Paul M., 2000. "New Varieties And The Returns To Commodity Promotion: The Case Of Fuji Apples," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 29(1), pages 1-14, April.
    5. Aysoy, Cevriye & Kirli, Duygu Halim & Tumen, Semih, 2015. "How does a shorter supply chain affect pricing of fresh food? Evidence from a natural experiment," Food Policy, Elsevier, vol. 57(C), pages 104-113.
    6. Zapata, Hector O. & Gil, Jose M., 1999. "Cointegration and causality in international agricultural economics research," Agricultural Economics, Blackwell, vol. 20(1), pages 1-9, January.
    7. Capps, Oral, Jr. & Sherwell, Pablo, 2005. "Spatial Asymmetry in Farm-Retail Price Transmission Associated with Fluid Milk Products," 2005 Annual meeting, July 24-27, Providence, RI 19316, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    8. Lwin, Wuit Yi & Henneberry, Shida Rastegari, 2018. "Price transmission behavior of melons market in Myanmar-China border trade," 2018 Annual Meeting, August 5-7, Washington, D.C. 274276, Agricultural and Applied Economics Association.
    9. Richards, Timothy J. & Patterson, Paul M., 1998. "New Varieties and the Returns to Commodity Promotion: Washington Fuji Apples," Working Papers 28541, Arizona State University, Morrison School of Agribusiness and Resource Management.
    10. Griffith, Garry R. & Moore, Walter B., 1991. "Livestock Production Policies And Meat Processing Margins: The Case Of New Zealand, 1967-1988," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 35(1), pages 1-28, April.
    11. Kim, Hyeyoung & Ward, Ronald W., 2010. "Price Transmission throughout the U.S. Food Distribution System," 2010 Annual Meeting, February 6-9, 2010, Orlando, Florida 56480, Southern Agricultural Economics Association.
    12. Ralph-C Bayer & Changxia Ke, 2010. "Rockets and Feathers in the Laboratory," School of Economics and Public Policy Working Papers 2010-20, University of Adelaide, School of Economics and Public Policy.
    13. Timothy Richards, 2007. "A nested logit model of strategic promotion," Quantitative Marketing and Economics (QME), Springer, vol. 5(1), pages 63-91, March.
    14. Schouteten, Joachim & Van Lembergen, Katrien & Molnár, Adrienn & Tarantini, Federico & Heene, Aimé & Gellynck, Xavier, 2014. "The European Food Prices Monitoring Tool as a Prerequisite for more Price Transparency in the Food Chain," 2014 International European Forum, February 17-21, 2014, Innsbruck-Igls, Austria 199387, International European Forum on System Dynamics and Innovation in Food Networks.
    15. Gel, Esma S. & Salman, F. Sibel, 2022. "Dynamic ordering decisions with approximate learning of supply yield uncertainty," International Journal of Production Economics, Elsevier, vol. 243(C).
    16. Brooker, John R. & Eastwood, David B. & Carver, Brian T. & Gray, Morgan D., 1997. "Fresh Vegetable Price Linkage Between Grower/Shippers, Wholesalers And Retailers," Journal of Food Distribution Research, Food Distribution Research Society, vol. 28(1), pages 1-58, February.
    17. Leigh Martindale, 2021. "‘I will know it when I taste it’: trust, food materialities and social media in Chinese alternative food networks," Agriculture and Human Values, Springer;The Agriculture, Food, & Human Values Society (AFHVS), vol. 38(2), pages 365-380, June.
    18. Bixuan Yang & Frank Asche & Tao Li, 2022. "Consumer behavior and food prices during the COVID‐19 pandemic: Evidence from Chinese cities," Economic Inquiry, Western Economic Association International, vol. 60(3), pages 1437-1460, July.
    19. Emerick, Paula A. & Willett, Lois Schertz & Novakovic, Andrew M., 1993. "Incorporating Price Regulation in Causality Tests for Dairy Markets," Staff Papers 121338, Cornell University, Department of Applied Economics and Management.
    20. Fousekis, Panos & Katrakilidis, Constantinos & Trachanas, Emmanouil, 2016. "Vertical price transmission in the US beef sector: Evidence from the nonlinear ARDL model," Economic Modelling, Elsevier, vol. 52(PB), pages 499-506.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jmathe:v:12:y:2024:i:9:p:1289-:d:1382028. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.