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Article Contents

# The optimal pricing and ordering policy for temperature sensitive products considering the effects of temperature on demand

• * Corresponding author: ZHI-PING FAN
The study is supported in part by the National Natural Science Foundation of China (Project No. 71571039) and the 111 Project (B16009).
• Temperature sensitive products such as down jackets are commonly used in customers' daily life. The market demand for these products is directly related to the average temperature during the selling period. This study focuses on joint pricing and ordering decisions for temperature sensitive products. First, the four types of temperature sensitive products are considered: HTSPs, MTSPs, LTSPs and HLTSPs. By analyzing the demand characteristics of these types of products, four corresponding demand functions are constructed. Then, the four joint pricing and ordering decision models are constructed considering the temperature sensitive products. By solving the four constructed models, the retailer's optimal policy regarding price and order quantity for HTSPs, MTSPs, LTSPs and HLTSPs can be determined. Furthermore, the impacts of the average temperature and temperature sensitive parameter on retailer's optimal policy are analyzed for HTSPs, MTSPs, LTSPs and HLTSPs. The results show that both average temperature during the selling period and temperature sensitive parameter can affect retailer's optimal policy, but the trend and extent of the impacts differ for the four types of products.

Mathematics Subject Classification: Primary: 90B05, 68W27; Secondary: 68W40.

 Citation:

• Figure 1.  The curves of temperature sensitive functions for HTSPs, MTSPs, LTSPs and HLTSPs

Figure 2.  The curves of temperature sensitive functions for MTSPs and HLTSPs when $\bar{T} = {{\bar{T}}_{A}} = {{\bar{T}}_{B}}$

Figures(2)