Residues Control for Perishables in Retail Through Dynamic Pricing
摘要
Modern Information and Communication Technologies allow to adjust retail prices in real time maximizing profitability and inventory turnover. For perishable goods, lowering prices as the product approaches its expiration date helps increase sales and reduce waste. Four models of a perishable product’s demand control in retail through the dynamic prices during one fixed sales cycle are described. Demand follows a compound Poisson process, and no replenishment is allowed during the sales cycle. Within the diffusion approximation framework for the inventory level dynamics, the problems of maximizing expected revenue and profit are addressed. The proposed three models allow to sell the product almost surely during its lifetime, that is, realize the zero-ending inventory strategy. The fourth model is more flexible and makes it possible to optimize the size of residues depending on the cost of disposal.