Developing a model for pricing and control the inventory of perishable products with exponential demand

Abstract

Pricing and controlling the inventory of perishableproducts have key roles in determining the level of profit for those involved in the supply chains. Chain profit can be increased by increasing sales during the product life via the application of pricing strategies, avoiding the loss of value of perishable products over time. In this research, sales profit was maximized by presenting a mathematical model to determine the price change points (using the Hsien function) and the optimal price and order quantity for perishable products with an exponential and price- and time-dependent distributed demand. Due to the complexity of the problem, the solution method used in this study was the genetic algorithm. The analysis of the effect of different parameters and optimal solution results showed that a 2% increment in decay rate would lead to a 10% reduction in profits, and other analyses recommended for managers at the end of the article.