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Optimal pricing of perishable products with replenishment policy in the presence of strategic consumers

  • * Corresponding author: Xiaohong Chen

    * Corresponding author: Xiaohong Chen 
Abstract Full Text(HTML) Figure(6) / Table(3) Related Papers Cited by
  • Recognizing that strategic consumers have become increasingly common in the perishable products market, we develop a two-stage pricing model for a monopolistic firm with two classes of inventory strategies: non-replenishment and replenishment. First, the retailer mapping out his pricing policy, and then consumers determining their buying behavior given the retailers policy. Our results indicate that the game equilibrium exists between retailers and consumers in both cases. For a given realized price and inventory policy, the consumer's space is split into several areas by the optimal threshold functions. Inventory replenishment decisions are affected by market demand and a decline factor of consumers reservation value. The retailers profit loss is not necessarily related to the consumers waiting behavior but results from the ignorance of this behavior when pricing.

    Mathematics Subject Classification: Primary: 90B60; Secondary: 91B06.

    Citation:

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  • Figure 1.  Customer types for the case without inventory replenishment1

    Figure 2.  Customer types for the case with inventory replenishment2

    Figure 3.  Impact of Pricing Strategies on Consumer Waiting Behavior

    Figure 4.  Variation of the Profits of a Seller with an Initial Stock

    Figure 5.  Impact of Q and $\lambda$ on the Profits of Sellers

    Figure 6.  Profits of a Seller with $\alpha$ Change

    Table 1.  Pricing Strategy and Retailer Expected Profits Under Both Scenarios3

    Q $[p_1, p_2]$Expected profitsDistribution of expected profits
    0[0.419, 0.392]0.909(45.4%, 9.8%, 44.8%)
    1[0.548, 0.362]0.790(1.1%, 42.8%, 37.5%, 13.4%, 5.1%)
     | Show Table
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    Table 2.  Optimal Pricing and Expected Profit When Customers Are Non-strategic4

    Q $[p_1, p_2]$Expected profitsDistribution of expected profits
    0[0.454 0.357]0.933(56.2%, 43.8%)
    1[0.487 0.312]0.862(49.8%, 38.7%, 11.5%)
     | Show Table
    DownLoad: CSV

    Table 3.  Influence of Consumer Waiting Behavior on Seller Profit6

    Case Ⅰ (%)Case Ⅱ(%)
    Q$\alpha=0.5$$\alpha=1$$\alpha=1.5$$\alpha=0.5$$\alpha=1$$\alpha=1.5$
    0-2.61-10.04-38.74-4.95-11.7-33.31
    1-9.21-16.73-40.92-4.64-20.52-71.89
    57.0822.3252.68-12.30-17.79-43.36
     | Show Table
    DownLoad: CSV
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