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A simulation of the impacts of dynamic price management for perishable foods on retailer performance in the presence of need-driven purchasing consumers

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  • Jaekwon Chung

    (Kookmin University, Seoul, South Korea)

  • Dong Li

    (University of Liverpool, Liverpool, UK)

Abstract

Numerous studies have investigated dynamic pricing for perishable products. The models have been designed to determine an optimal pricing structure and improve retailer performance. Previous studies on pricing models for perishable products have considered various assumptions of consumer demand and purchasing behaviour from deterministic and stochastic price-dependent demands to myopic and strategic consumer purchasing behaviour. They have not, however, considered consumer demand in reaction to a situation where the display stock of a particular product has different qualities (such as shelf-life) and prices available at the same time. This is particularly applicable in the analysis of dynamic pricing models for perishable foods. In this paper, we investigate the impact of frequency of discount during a product’s selling period on retailer performance, by considering changes in consumer purchasing behaviour in response to the display stock of a particular food product having different remaining shelf-life and prices. On the basis of a literature review and data obtained from interviews with food retailers, a simulation study is performed to compare the performance of different pricing policies. The results demonstrate the benefits gained by adopting more dynamic price policies.

Suggested Citation

  • Jaekwon Chung & Dong Li, 2014. "A simulation of the impacts of dynamic price management for perishable foods on retailer performance in the presence of need-driven purchasing consumers," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 65(8), pages 1177-1188, August.
    • Handle: RePEc:pal:jorsoc:v:65:y:2014:i:8:p:1177-1188
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    Cited by:

    1. Andrei M. Bandalouski & Natalja G. Egorova & Mikhail Y. Kovalyov & Erwin Pesch & S. Armagan Tarim, 2021. "Dynamic pricing with demand disaggregation for hotel revenue management," Journal of Heuristics, Springer, vol. 27(5), pages 869-885, October.
    2. Jaekwon Chung, 2019. "Effective Pricing of Perishables for a More Sustainable Retail Food Market," Sustainability, MDPI, vol. 11(17), pages 1-16, August.
    3. ASADABADI Mehdi Rajabi, 2016. "A Revision On Cost Elements Of The Eoq Model," Studies in Business and Economics, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 11(1), pages 5-14, April.
    4. Santos, Maria João & Martins, Sara & Amorim, Pedro & Almada-Lobo, Bernardo, 2022. "On the impact of adjusting the minimum life on receipt (MLOR) criterion in food supply chains," Omega, Elsevier, vol. 112(C).
    5. Ganguly, Subhamoy & Robb, David J., 2022. "An analytical model to characterize consumption and wastage of fresh fruit and vegetables in households," European Journal of Operational Research, Elsevier, vol. 300(1), pages 151-163.
    6. Mohamed Ben-Daya & Elkafi Hassini & Zied Bahroun & Hafsa Saeed, 2023. "Optimal pricing in the presence of IoT investment and quality-dependent demand," Annals of Operations Research, Springer, vol. 324(1), pages 869-892, May.

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