Optimal pricing model for non-instantaneous deterioration items with price and freshness sensitive demand under the e-commerce environment in China

Kybernetes ◽  
2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Weihua Xu ◽  
Ketong Zhao ◽  
Yixuan Shi ◽  
Sun Bingzhen
Keyword(s):  
Dynamic Pricing ◽  
Decision Problems ◽  
Theoretical Research ◽  
Pricing Strategy ◽  
Optimal Pricing ◽  
Managerial Decision ◽  
Pricing Policy ◽  
Content Type ◽  
Demand Rate ◽  
Total Profit

Purpose The purpose of this paper is to focus on determining the optimal sales price for non-instantaneous deterioration items according to consideration of freshness and demand. Design/methodology/approach In this model, the authors have described the demand function which is dependent on price as well time. The products that the deterioration is considered as non-instantaneous have a determinate shelf life, and their demand rate will decrease over time after the beginning of the selling period. This paper depicts that the total profit of non-instantaneous deterioration items using the dynamic pricing strategy is higher than that using fixed pricing strategy. Findings Finally, to illustrate and validate the model, the authors have used some numerical examples. A new freshness function and the model to study pricing policy are developed as well applied to solve managerial decision problems. Originality/value This paper complements the lack of the existing theoretical research of pricing for non-instantaneous deterioration items under an e-commerce environment. A new freshness function and the model to study pricing policy are developed as well applied to solve managerial decision problems.

scholarly journals Dynamic Pricing Policy Using Preservation Technology with Stock and Price Sensitive Demand

2020 ◽  
Vol 26 (3) ◽  
pp. 266-274
Author(s):  
Uttam Kumar Khedlekar ◽  
Priyanka Singh ◽  
Neelesh Gupta
Keyword(s):  
Dynamic Pricing ◽  
Policy Decision ◽  
Pricing Strategy ◽  
Selling Price ◽  
Market Demand ◽  
Pricing Policy ◽  
Preservation Technology ◽  
Proposed Model ◽  
Stock Policy ◽  
Dependent Demand

This paper aims to develop a dynamic pricing policy for deteriorating items with price and stock dependent demand. In declining market demand of items decreases with respect to time and also after a duration items get outdated. In this situation it needs a pricing policy to sale the items before end season. The proposed dynamic pricing policy is applicable for a limited period to clease the stock. Policy decision regarding the selling price could aggressively attracts the costumers. Objectives are to maximize the prot/revenue, pricing strategy and economic order level for such a stock dependent and price sensitive items. We are giving numerical example and simulation to illustrate the proposed model.

OPTIMAL PRICING AND PRODUCTION POLICIES OF A MAKE-TO-STOCK SYSTEM WITH FLUCTUATING DEMAND

2009 ◽  
Vol 23 (2) ◽  
pp. 205-230 ◽  
Author(s):  
Jean-Philippe Gayon ◽  
Işılay Talay-Değirmenci ◽  
Fikri Karaesmen ◽  
E. Lerzan Örmeci
Keyword(s):  
Dynamic Pricing ◽  
Numerical Study ◽  
Optimal Pricing ◽  
Pricing Strategies ◽  
Pricing Policy ◽  
Stock Level ◽  
Production Inventory ◽  
Static Pricing ◽  
Make To Stock ◽  
Production Inventory System

We study the effects of different pricing strategies available to a production–inventory system with capacitated supply, which operates in a fluctuating demand environment. The demand depends on the environment and on the offered price. For such systems, three plausible pricing strategies are investigated: static pricing, for which only one price is used at all times, environment-dependent pricing, for which price changes with the environment, and dynamic pricing, for which price depends on both the current environment and the stock level. The objective is to find an optimal replenishment and pricing policy under each of these strategies. This article presents some structural properties of optimal replenishment policies and a numerical study that compares the performances of these three pricing strategies.

Baby Dreams: pricing for products and apparel

2016 ◽  
Vol 6 (1) ◽  
pp. 1-13
Author(s):  
Farzana Quoquab ◽  
Fauziah Sh. Ahmad ◽  
Nor Hazarina ◽  
Maisarah Ahmad
Keyword(s):  
Undergraduate Students ◽  
Subject Area ◽  
Marketing Strategies ◽  
Marketing Management ◽  
Pricing Strategy ◽  
Pricing Policy ◽  
Middle Income ◽  
Content Type ◽  
Start Up ◽  
To Come

Subject area Marketing Management, Entrepreneurship. Study level/applicability This case meant for advanced undergraduate students, taking courses of marketing management that covers the topics related to pricing strategies. With regard to strategic marketing class, this case can be used to explain how pricing strategy plays significant role in attracting and retaining customers. Case overview This case teaches about the importance of understanding the marketing strategies pertaining to pricing. Nora the entrepreneur of Baby Dreams focusing on baby items was in a dilemma in deciding the appropriate pricing strategy for her business. She was in doubt whether her low-price strategy which she believed was appropriate for the low- and middle-income groups was the best strategy for her business. The drastic decrease in sales pushed her to think about the effectiveness of her pricing. All together, Nora owned three Baby Dreams’ outlets. However, due to poor sales, she had to shut down two outlets in 2013. For the last outlet, she had to take an immediate decision in terms of pricing, as the start-up money was depleting, and with no improvement, it was expected to be finished by May 2014. Expected learning outcomes Using this case, students will be able to have an intellectual openness in accepting different ways of finding a solution for a particular problem. This case illustrates the importance of understanding the marketing strategies pertaining to pricing. Moreover, it is also highlighted that, offering low price is not the panacea of sales decrease. It is also necessary for the small business’s survival to look at competitors’ pricing effort to come up with a better pricing policy. Supplementary materials Teaching Notes are available for educators only. Please contact your library to gain login details or email [email protected] to request teaching notes.

Optimal pricing decisions for multichannel healthcare service with differing consemers’ knowledge levels

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Feng Yang ◽  
Wei Wang ◽  
Xiabing Zheng
Keyword(s):  
Service Providers ◽  
Consumer Surplus ◽  
Healthcare Services ◽  
Pricing Strategy ◽  
Optimal Pricing ◽  
Model Framework ◽  
Two Stage ◽  
Content Type ◽  
Knowledge Levels ◽  
Offline Channels

Purpose The purpose of this paper is to establish a stylized model to solve the pricing strategy, resource allocation and consumer surplus problems of multichannel healthcare services. Design/methodology/approach This paper considers a two-stage decision model with different levels of consumers’ knowledge. Faced with physical problems, knowledgeable consumers can solve their problems by seeking online healthcare channels, while unknowledgeable consumers need to make a two-stage decision to try to solve their problems. Findings The effective diagnosis rate and the proportion of knowledgeable consumers positively impact the optimal pricing in online and offline channels. In addition, a higher proportion of knowledgeable consumers does not result in higher demand in the online and offline channels. Moreover, if service providers lower their prices a small amount, they will lose some profit, but the consumer surplus will be higher, which will encourage more consumers to access healthcare services. Research limitations/implications Knowledge levels are simplified into two categories. Also, the authors assume the resources of online and offline healthcare services are comparable. Originality/value This paper incorporates the knowledge level and misdiagnosis rate into the model framework to study the most effective pricing strategy for multichannel healthcare services.

Dynamic pricing of perishable food as a sustainable business model

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Michael Scholz ◽  
Roman-David Kulko
Keyword(s):  
Willingness To Pay ◽  
Food Waste ◽  
Dynamic Pricing ◽  
Pricing Strategy ◽  
Pricing Strategies ◽  
Sustainable Business ◽  
Content Type ◽  
Food Retailers ◽  
Static Pricing ◽  
The Impact

PurposeThe purpose of this paper is to (1) investigate the effect of freshness on consumers' willingness to pay, (2) derive static and dynamic pricing strategies and (3) compare the effect of these pricing strategies on a retailer's revenue and food waste. This investigation helps to reveal the potentials of dynamic pricing strategies for building more sustainable business models.Design/methodology/approachThe authors conduct an online experiment to measure consumers' willingness to pay for fresh and three-days’ old strawberries. The impact of freshness on willingness to pay is analysed using univariate tests and regression analysis. Pricing strategies are compared using a Monte Carlo simulation.FindingsThe results of this study show that freshness largely determines consumers' willingness to pay and price sensitivity. This renders dynamic pricing a promising strategy from an economic point of view. The results of the simulation study show that food waste can be reduced by up to 53.6% with a dynamic pricing instead of a static pricing strategy in the case that there are as many consumers as strawberry packages in the inventory. Revenue can be increased by up to 10% compared to a static pricing strategy based on fresh strawberries.Practical implicationsThis study suggests that food retailers can improve their revenue when switching from static to dynamic pricing. Furthermore, in most cases, food retailers can reduce food waste with a dynamic instead of a static-pricing strategy, which might help to improve their image through a more sustainable business model and attract additional consumers.Originality/valueThis study is the first to analyse the possibility of using food freshness to design a dynamic pricing strategy and to analyse the impact of such a pricing strategy on both, a retailer's revenue and a retailer's food waste.

A non-instantaneous inventory model of agricultural products considering deteriorating impacts and pricing policies

Kybernetes ◽  
2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Md. Rakibul Hasan ◽  
Abu Hashan Md Mashud ◽  
Yosef Daryanto ◽  
Hui Ming Wee
Keyword(s):  
Decision Model ◽  
External Factors ◽  
Agricultural Products ◽  
Optimal Pricing ◽  
Selling Price ◽  
Defective Items ◽  
Content Type ◽  
Deterioration Rate ◽  
Total Profit ◽  
Inventory Decision

Purpose External factors such as improper handling, extreme weather and insect attacks affect product quality. It is most obvious in fruit products which have a high deterioration rate. Moreover, decaying fruits will increase the deteriorating of other good ones. The purpose of this study is to derive the optimal pricing and replenishment decisions for agricultural products considering the effect of external factors that induce deterioration. Design/methodology/approach In this paper, the study investigates ways to reduce the product deterioration rate by separating the near defective items from the other good products and accelerating the quick sales of the near defective items at a discounted price. The objective is to maximize the total profit by optimizing the selling price and the replenishment cycles. Two scenarios are investigated. In the first scenario, the retailer offers a selling price discount for near defective products to stimulate customer demand. In the second scenario, the retailer does not offer such discounts. Findings An algorithm to solve the model is derived. Further, numerical examples are developed to compare the total profit for the two scenarios. Theoretical derivations and graphical results show the concavity of the profit function. Finally, the sensitivity analysis shows that the total profit of the discount model is higher. Originality/value This study contributes to a new pricing and inventory decision model. The research provides insights to retailers on making optimal pricing and replenishment decisions for non-instantaneous deterioration items, as well as reducing the external factors that influence higher deterioration rate through separating good products from the near defective ones which are sold at a discount to induce the sale.

Optimal pricing strategies for delivery alliance in online retailing platform

2019 ◽  
Vol 10 (3) ◽  
pp. 447-464
Author(s):  
Yufei Yan ◽  
Zuoliang Ye ◽  
Miao Sun
Keyword(s):  
Service Quality ◽  
Optimization Problems ◽  
Pricing Strategy ◽  
Distribution Model ◽  
Future Research ◽  
Optimal Pricing ◽  
Pricing Strategies ◽  
Online Retailing ◽  
Content Type ◽  
Basic Model

Purpose Nowadays, some online retailing platforms emerge to integrate transport capacity to provide standard distribution service for sellers. Such an integrated form of service is defined as delivery alliance (DA). To have a better understanding of how to price the service, this study aims to fixate on the seller’s problems and builds a series of profit maximization models in accordance with the two-sided market pricing theory within a platform business model. Design/methodology/approach In the present study, some optimization models are built in the two-sided market type and the optimal solutions are found in a three-dimensional decision space. By using the basic model as the benchmark, some optimization problems of DA in realistic situations are discussed. Particularly, a power-law-distribution model is established to deal with the uncertainty in forecasting. Also, a price-sensitive model and a loss-aversion model are presented to describe the various reactions of sellers to charging modes. Finally, some combined situations are discussed and the strategies are compared under the mentioned models. Findings By selecting the basic model as the benchmark, the specific pricing strategies are found for each context to yield the optimal profits. The flexibility of pricing strategy in the basic model and rigid pricing strategies in extended models, are discussed. As a result, the guidelines for the online retailing platforms are developed on designing and pricing the DA service. Research limitations/implications First, it would be interesting to expand the pricing plan of the platform. For instance, menu pricing and quantity discount have not been considered, which are common in practice. The time discounting has also been ignored. If the time value were calculated, the contract fees would be more critical due to the earliest of collecting money. Finally, those joiners who have huge order sizes are crucial for the ecosystem indeed, but arouse no attention. While in reality, they may have more power to bargain with the platform. Thus, how the platform competition affects the pricing strategies needs future research. Originality/value The optimal pricing strategies under these models are analytically found out, and it is shown that the presented models result in the same scale of joiners and profits in optimization. This suggests that DA works well in various behavioral contexts. This also suggests that DA is a significant controller in service quality improvement. Then, the optimal pricing strategies are compared among all the models. During this, it is discovered that the realistic contexts might reduce the profit, whereas an appropriate pricing strategy can pull this back without loss of service quality.

Optimal pricing strategy in uncertain dual distribution channel with retail services

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Saied Farham-Nia ◽  
Alireza Ghaffari-Hadigheh
Keyword(s):  
Supply Chain ◽  
Supply Chains ◽  
Distribution System ◽  
Uncertainty Theory ◽  
Distribution Channel ◽  
Pricing Strategy ◽  
Optimal Pricing ◽  
Content Type ◽  
Dual Distribution ◽  
Retail Services

Purpose The aim of this paper is to study the optimal pricing decision in a supply chain with a dual distribution channel in a centralized and decentralized decision-making systems and investigate the economic impact of retail services on pricing behaviors with respect to the power structures. Design/methodology/approach To reach the equilibrium behavior of decision-makers, two-stage optimization, the Stackelberg game and the Bertrand–Nash game have been used. Also, to explore the effect of environmental uncertainty on the behavior of decision-maker, demand functions are characterized as an uncertain price dependent, service dependent and channel dependent. Decision parameters are based on experts’ belief degree, in the sense of uncertainty theory initiated by Liu (2007). Findings Obtained results reveal that the retail services have a strategic role in the centralized supply chain and the decentralized supply chain with dominant manufacturer, while both the supply chain and the consumer suffer from higher environmental indeterminacy. Research limitations/implications This study is based on possible scenarios of dual distribution system only. Further research is recommended to investigate the applicability of the authors framework in different distribution systems. Practical implications The study findings are believed to be valuable for supply chains and organizations about to make a strategic decision on price of their good/service. Originality/value The paper contributes to the scarce literature on Uncertainty Theory initiated by Liu (2007), and combination of it with Game Theory for pricing in distribution system of supply chains. The study also contributes by investigating impact of non-price competitive factor (level of service) on pricing strategy.

scholarly journals Dynamic Pricing of Fashion-Like Multiproducts with Customers’ Reference Effect and Limited Memory

2014 ◽  
Vol 2014 ◽  
pp. 1-10 ◽  
Author(s):  
Mengqi Liu ◽  
Wenjie Bi ◽  
Xiaohong Chen ◽  
Guo Li
Keyword(s):  
Steady State ◽  
Dynamic Pricing ◽  
Reference Price ◽  
Memory Window ◽  
Optimal Pricing ◽  
Price Effect ◽  
Pricing Policy ◽  
Limited Memory ◽  
Bounded Memory ◽  
State Price

We study a fashion retailer’s dynamic pricing problem in which consumers present reference effect and memory window. Based on the theory of Baucells et al. (2011), we propose a new reference-price updating mechanism in fashion and textile (FT) industry where consumers have a bounded memory window and anchor on the first and most recent price in any memory window. Moreover, we study the impacts of this mechanism on optimal pricing policy for a retailer selling multiple fashion-like products and analyze optimal price’s steady state, monotonicity, and convergence. For two-product case, we find that, for otherwise identical products, the steady-state price of a core product is lower than that of a noncore product. We compute the retailer’s loss of revenue if he incorrectly assumes the reference-price effect to be at the product level and prices the products individually. Further, as illustrated with numerical results, our model is a flexible way to make pricing strategy if the retailer can anticipate the length of consumers’ memory window.

Supply Chain Competition with Information Sharing

2011 ◽  
Vol 486 ◽  
pp. 309-312
Author(s):  
Rong Yao He ◽  
Zhong Kai Xiong ◽  
Yu Xiong
Keyword(s):  
Supply Chain ◽  
Supply Chains ◽  
Information Sharing ◽  
Optimal Pricing ◽  
Market Demand ◽  
Pricing Policy ◽  
Supply Chain Competition ◽  
Demand Information ◽  
Total Profit

Given the case of two competing supply chains each consisting of one manufacturer and one retailer, we explore whether the retailers should share the market demand information they know with their manufacturers when the manufacturers do not know the same specific demand information. We also determine the optimal pricing policy and total profit for the retailers when each chain either shares or does not share market demand information. We find that sharing information is always more profitable for both retailer and supply chain.

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