Article: Optimal joint dynamic pricing and inventory replenishment policy for perishable products with freshness-sensitive demand Journal: International Journal of Mathematics in Operational Research (IJMOR) 2025 Vol.31 No.2 pp.263 - 281 Abstract: This paper aims to propose a mathematical model for joint pricing and inventory replenishment decisions of a retailer who faces a freshness-sensitive demand. The retailer has the option to submit fast replenishment orders with lower profit margins to other peer retailers within the short lifecycle of the perishable products in addition to the regular replenishment orders that take place at the start of the lifecycle. Also, the retailer can sell the end-of-season perished product at lower prices. The proposed model is capable of handling different types of demand and freshness functions. To show the applicability of the proposed model, it is used to optimise pricing, discounting, inventory, and replenishment decisions of two product categories of a major retailer in Iran using real-world data. Results indicate that the retailer should pursue a specific joint pricing and replenishment strategy in each product category. A sensitivity analysis is also performed for initial inventory and initial price for each of the categories. Results revealed that each of the factors contributes differently to the total profit in each category. The total profit showed a different level of sensitivity to changes in the two aforementioned tweaked parameters. Inderscience Publishers - linking academia, business and industry through research

Title: Optimal joint dynamic pricing and inventory replenishment policy for perishable products with freshness-sensitive demand

Authors: Mahmoud Dehghan Nayeri; Roghayeh Haddad

Addresses: Department of Industrial Management, Faculty of Management and Economics, Tarbiat Modares University, Tehran, Iran ' Department of Industrial Management, Faculty of Management and Economics, Tarbiat Modares University, Tehran, Iran

Abstract: This paper aims to propose a mathematical model for joint pricing and inventory replenishment decisions of a retailer who faces a freshness-sensitive demand. The retailer has the option to submit fast replenishment orders with lower profit margins to other peer retailers within the short lifecycle of the perishable products in addition to the regular replenishment orders that take place at the start of the lifecycle. Also, the retailer can sell the end-of-season perished product at lower prices. The proposed model is capable of handling different types of demand and freshness functions. To show the applicability of the proposed model, it is used to optimise pricing, discounting, inventory, and replenishment decisions of two product categories of a major retailer in Iran using real-world data. Results indicate that the retailer should pursue a specific joint pricing and replenishment strategy in each product category. A sensitivity analysis is also performed for initial inventory and initial price for each of the categories. Results revealed that each of the factors contributes differently to the total profit in each category. The total profit showed a different level of sensitivity to changes in the two aforementioned tweaked parameters.

Keywords: dynamic pricing; inventory management; perishable products; inventory replenishment.

DOI: 10.1504/IJMOR.2025.147023

International Journal of Mathematics in Operational Research, 2025 Vol.31 No.2, pp.263 - 281

Received: 04 Sep 2023
Accepted: 08 Sep 2023
Published online: 10 Jul 2025 *

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Title: Optimal joint dynamic pricing and inventory replenishment policy for perishable products with freshness-sensitive demand

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