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October  2019, 15(4): 1579-1597. doi: 10.3934/jimo.2018112

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

 1 School of Business, Central South University, Changsha 410083, China 2 Institute of Big Data and Internet Innovation, Hunan University of Commerce, Changsha 410205, China 3 School of Business, Central South University, Changsha 410083, China

* Corresponding author: Xiaohong Chen

Received  September 2016 Revised  May 2018 Published  October 2019 Early access  August 2018

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.

Citation: Guodong Yi, Xiaohong Chen, Chunqiao Tan. Optimal pricing of perishable products with replenishment policy in the presence of strategic consumers. Journal of Industrial & Management Optimization, 2019, 15 (4) : 1579-1597. doi: 10.3934/jimo.2018112
References:

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References:
Customer types for the case without inventory replenishment1
Customer types for the case with inventory replenishment2
Impact of Pricing Strategies on Consumer Waiting Behavior
Variation of the Profits of a Seller with an Initial Stock
Impact of Q and $\lambda$ on the Profits of Sellers
Profits of a Seller with $\alpha$ Change
Pricing Strategy and Retailer Expected Profits Under Both Scenarios3
 Q $[p_1, p_2]$ Expected profits Distribution 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%)
 Q $[p_1, p_2]$ Expected profits Distribution 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%)
Optimal Pricing and Expected Profit When Customers Are Non-strategic4
 Q $[p_1, p_2]$ Expected profits Distribution 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%)
 Q $[p_1, p_2]$ Expected profits Distribution 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%)
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 5 7.08 22.32 52.68 -12.30 -17.79 -43.36
 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 5 7.08 22.32 52.68 -12.30 -17.79 -43.36
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