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Dynamic pricing and ordering decision for the perishable food of the supermarket using RFID technology
Abstract
Purpose
The purpose of this paper is to study how supermarkets can maximize profits of selling perishable food through price adjustment based on real‐time product quality and values.
Design/methodology/approach
The value of the perishable food can be traced based on an automatic product identification technology radio frequency identification (RFID). With the support of the RFID, an optimization model can be developed to enable product tracking.
Findings
The analysis of the model shows promising benefits of applying a dynamic pricing policy and obtains the optimal ordering decision in respects of deterministic and stochastic demand function with RFID.
Research limitations/implications
Although technological approaches for tracking products have attracted increasing attentions in both research and practice, little research have proved the profit using RFID by mathematics, the result of this paper can prove the benefit by using RFID.
Practical implication
The result of this paper can tell the supermarket how to make the price and the ordering decision by using the RFID.
Originality/value
This study proves the benefit of using the RFID by mathematical model based on the conceptual model before, and tell the method how to use RFID for pricing and making ordering decision.
... Research on sustainable revenue management and dynamic pricing for fashion goods has grown in recent years. Seminal works established the theoretical foundations for pricing perishable products [6,7], with subsequent studies incorporating factors such as age-dependent demand, product lifecycle, and demand learning [8][9][10]. Recent work has made progress in deriving optimal joint inventory-pricing policies under nonconcave demand [11] and validating the proft-concavity for deteriorating items [12]. ...
... Works Key focus Relevance to the current study 2008 [8] Dynamic pricing for perishable goods Introduces dynamic pricing concept 2013 [29] Pricing for deteriorating products Explores value deterioration 2015 [5] Weather impact on the apparel sector Highlights external demand factors 2017 [13] Pricing and ordering for perishables Integrates pricing and ordering 2018 [17] EOQ model with defective items Considers quality in inventory management 2019 [30] Fashion apparel pricing and replenishment Incorporates fashion level 2020 [3] Dynamic pricing with inventory decisions Combines pricing and inventory 2021 [22] Two-stage fashion sales pricing Examines multistage strategies 2022 [15] Robust dynamic pricing Addresses demand uncertainty 2024 [28] Inventory control with service-level demand Applies optimal control theory 2024 ...
... a. Plug the proft-maximizing constrained price p * (t) and output level m * (t) from Step 4 into equation (8). b. ...
This study develops a stochastic optimal control model to optimize dynamic pricing and production strategies for fashion retailers facing uncertain demand and rapid product devaluation. Applying the Hamilton–Jacobi–Bellman equation approach, we derive profit-maximizing joint pricing and production policies. Key findings include the following: (1) Dynamic pricing and responsive production strategies outperform static pricing in terms of expected discounted profit under various market conditions. (2) Optimal dynamic prices exhibit a declining trend over the product lifecycle, aligning with observed practices in fast fashion. (3) The optimal production rate adapts to current inventory levels and market conditions, balancing the trade-off between stockouts and holding costs. (4) The model demonstrates robustness to variations in price elasticity, providing a flexible decision framework for diverse fashion market segments. (5) Extreme demand volatility reduces the economic benefits of dynamic policies, highlighting the need for additional risk management strategies. This research contributes to sustainable operations’ literature by integrating pricing and production decisions under uncertainty, offering theoretically grounded and practical insights for fashion retailers to enhance profitability and reduce waste.
... For example, when a pack of yoghurt which expires after 21 days stands on the same shelf with a pack of yogurt which expires after 15 days, customers prefer to buy the pack which expires within 21 days. Within the cost-benefit-price triangle, customers prefer the product from which they can obtain maximum benefit and thus fresh stock are sold, while other stocks of the same product generally Sustainability 2017, 9,1330 3 of 22 become stale after a while. The lifecycle of perishable products comprise certain key rings. ...
... The amount of product loss particularly originating from the damages and spoilage on shelves or in stocks is assumed to be around 15%. Consequently, spoilage in food products occurs at serious levels [9][10][11]. In addition, excessive use of today's limited natural resources may cause difficulties and limitations in the production of products in the coming years. ...
... Therefore, low price based scenario is more profitable for both sustainable nature balance and sales sustainability in real life. Sustainability 2017, 9,1330 20 of 23 via scenario 3. Moreover, numerical simulation results are defined with figures to show the effects of the proposed system in detail. ...
Perishable products run their life cycle in a short period of time due to the shortness of their shelf lives. Product efficiency falls when especially non-recyclable products are thrown away without being used. Furthermore, this kind of products that unnecessarily occupy shelves of supermarkets cause supermarkets to follow an insufficient stock management policy. Unconscious and unplanned use of our limited natural resources will deteriorate the product portfolio for future generations. Such unconscious production and consumption patterns will disrupt natural balance and damage sustainability of products. In addition to creating very high costs for producers, sellers and consumers alike, these unsold or stale products lead to environmental problems due to such pricing policies. In other words, although the products have to be thrown away without being sold is attributed by many managers to be attributable to the unplanned over-orders, the actual reason is something else. The real contributor of the problem is changing purchase attitudes of customers because of wrong pricing policies of wholesaler. In addition, limited resources are also consumed fast and in unnecessary amounts. The imbalance in respect to the sustainability of these products leads to increase in the production costs, procurement costs and failure to achieve balance among products to be kept in storage houses as some of the products occupy stocks unnecessarily. In the present study, a new pricing policy is developed for product stock whose shelf lives are about to expire and generally become waste to increase salability of these products in reference to fresher stocks of these products. The present study, which is designed to reduce the above-mentioned losses, will seek to minimize the cost of waste, maximize the profit earned by supermarkets from the product, maximize product utilization rates and ensure sustainability of products and stocks as well. Fulfillment of these objectives will increase productivity and enhance the significance of product efficiency and nature-friendly attitudes.
... Existing studies on DSL do not study the effect on the replenishment strategy. The effect of discounting on the replenishment strategy is only studied in the context of FSL (Farughi et al., 2014;Lin et al., 2016;Liu et al., 2008;Qin et al., 2014). It is unknown how the replenishment strategy of a retailer will be affected when DSL or the combination of DSL and discounting is applied. ...
... In order to solve the optimization problem they developed a heuristic. Liu et al. (2008) developed an optimization model to determine optimal price and ordering decision. They first developed the model for deterministic demand and later extend it to stochastic demand. ...
... Unlike many studies (e.g. (Farughi et al., 2014;Liu et al., 2008;Qin et al., 2014)) we did include a shift in the LEFO-FEFO ratio instead of a demand increase when applying discount. We assumed the fraction of LEFO consumers that switch to FEFO corresponds to the discount level. ...
Approximately 89 million of tonnes of food is wasted every year in the EU along the whole food supply chain. The reasons for food waste by retailers include inappropriate quality control, overstocking and inaccurate forecasting. This study shows that food wasted by retailers can be reduced by discounting old products or by applying a dynamically adjustable expiration date (in other words dynamic shelf life (DSL)). We developed a simulation based optimization model to optimize the replenishment and discounting policy of a retailer who sells meat products. DSL outperforms a fixed shelf life (FSL) in terms of profit, waste, shortages and food safety. Furthermore, replenishment quantities can be higher. The benefits of DSL are greater when demand is low or when the shelf life of products is short. Discounting is a successful strategy to reduce food waste for both FSL and DSL. DSL without discounting is more effective than FSL with discounting. Combining DSL and discounting, allows for a further reduction of food waste.
... 2) kainodara (Lewis 2005;Liu et al. 2008;Heilporn et al. 2009;Kristhnamoorthy et al. 2010;Schön 2010;Nobibon et al. 2011;Sadjadi 2012); ...
... Darbų autoriai, kurių tyrimo objektas yra kainodara, sprendžia tokius uždavinius: produktų kainos ar antkainio pagrindimas (Lewis 2005;Liu 2008;Heilporn et al. 2009;Nobibon et al. 2011), taip pat su produktų kainos sprendimais susijusių rinkodaros priemonių parinkimas (Lewis 2005;Krishnamorthy et al. 2010). G. Heilporn et al. (2009) kartu su produktų kainodara nagrinėja ir paskirstymo tinklų kainodarą. ...
... Analizuojamuose darbuose taikytų optimizavimo metodų spektras platesnis (palyginti su ankstesnio analizės etapo darbais). Jie tokie: -stochastiniai metodai: imitacinis modeliavimas (Ginevičius 2011), stochastinis dinaminis programavimas (Liu et al. 2008), neapibrėžtasis (fuzzy) matematinis programavimas (Bhaskar et al. 2009); -euristiniai algoritmai (Ryals et al. 2007;Owczarczuk 2011;Kim et al. 2012). Taigi šios grupės mokslo darbų analizė taikomų metodų aspektu sustiprino ankstesnio analizės etapo įžvalgas dėl diskrečiojo programavimo. ...
The analysis focuses on researches on optimisation of marketing programmes conducted over the last decade. On one hand, methods and models suggested by the researchers as well as results obtained by experimental modelling do not comply with contemporary marketing needs and therefore can hardly be used in practice. On the other hand, they are treated as a significant basis for the development of methodological research. Given the results of the analysis, the systemic guidelines were designed. The guidelines were concretised according to specifications based on three models required for marketing programme optimisation. The presentation of the specifications is based on fundamental determinants for the content and composition of models, which are as follow: practice requirements, existing methodological assumptions and methods for applied decisions.
Rinkodaro sprogramų optimizavimo metodinių prielaidų analizė
Santrauka
Atlikta pastarojo dešimtmečio rinkodaros programų optimizavimo tyrimų analizė. Tyrėjų pasiūlyti šios paskirties metodai ir modeliai, juos taikant gauti eksperimentinio modeliavimo rezultatai, viena vertus, neatitinka šiandienės rinkodaros reikmių ir negali būti tiesiogiai panaudoti praktikoje, kita vertus, vertintini kaip reikšminga metodinė tyrimų plėtros bazė. Atsižvelgiant į atliktos analizės rezultatus parengtos problemos sisteminio sprendimo gairės, kurios konkretintos trijų modelių, reikalingų rinkodaros programos optimizavimo komplekso uždaviniams spręsti, specifikacijomis. Jos pateiktos esminę įtaką modelių turiniui ir kompozicijai turinčių veiksnių (praktikos reikalavimai, esamos metodinės prielaidos, taikomi sprendimo metodai) aspektu.
Reikšminiai žodžiai: rinkodaros priemonės, rinkodaros programa, rinkodaros efektyvumas, rinkodaros grąža, rinkodaros sąnaudos, optimizavimas.
... Table 8. It is notable that these few references show an enhanced inclusion of (high quality) data collected from radio frequency identification (RFID) technology that serves to keep track of the age of inventory which is surprisingly different to deterministic cases; see, e.g., Chande, Dhekane, Hemachandra, and Rangaraj (2005), Broeckmeulen and van Donselaar (2007), Liu, Tang, and Huang (2008). In fact, the traceability of items, especially food, is a highly important operations management function (Wang et al., 2009). ...
... For instance, RFID-controlled inventory subject to stochastic, seasonal demands is studied in Broeckmeulen and van Donselaar (2007) in a PR model where demand depends on remaining lifetimes and thus the freshness of items; see also Lu, Song, and Zhu (2008). Dynamic pricing for deteriorating (food) products subject to price-and freshness-dependent demand is examined in Liu et al. (2008). The authors use the practical case of supermarkets where price adjustments based on demand forecasting gained via RFID are used to automatically mark down items near their expiration date in order to stimulate demand. ...
... Results regarding the optimal pricing and ordering strategy show that the deterioration rate has a significant influence on pricing as well as the order quantity. Additional marketing issues such as pricing, time value of money, or inflation in EOQ-based approaches are covered in Liao and Xie (2005), Maity and Maiti (2008), Chande et al. (2005), and Liu et al. (2008) where multiple items are considered in Maity and Maiti (2008), but without accounting for setup times or costs. As stated before, multi-level approaches for production processes or more complex BOMs are absent until this point. ...
Items with short lifetimes that are subject to deterioration are important in the business world. Research has a long tradition in integrating deterioration and value loss effects into mathematical models for inventory planning and control where such effects are understood as a general loss or shrinkage of inventory. However, there has been little work in the modeling of lifetime restrictions of items to prevent wastage and disposals, especially in a dynamic planning context. Globalization and other trends extend the consideration of single companies to whole supply chains, implying increased coordination and information needs. This is important as planning decisions impact lead times and thus the quality of items in the whole supply chain. Products that exceed their useful lifetime can impose high costs due to inventory loss or the need to rework them. This implies increased utilization of (scarce) resources, e.g., machine time, metals, and/or energy, thereby increasing CO2CO2-levels. We survey the state-of-the-art regarding depreciation effects and the modeling of lifetime constraints as well as a classification of models following business planning functions of the value chain. A critical evaluation of approaches and their limitations is provided, highlighting directions for future research.
... Many studies have presented pricing models that are applicable to general peris hable products, such as perishable foods, seasonal fashion goods, weekly magazines, theatre seats, and airline tickets, to maximize profit (Aviv and Pazgal 2008;Bitran and Mondschein 1997;Dasu and Tong 2010;Federgruen and Heching 1999;Gallego and Ryzin 1994;Kincaid and Darling 1963;Li 2001;Rajan, Steinberg and Steinberg 1992;Su 2007 (Li, Tang, O'Brien and Wang 2006;Liu, Tang and Huang 2008;Wang and Li 2012). Prior studies on the pricing of either general perishable products or perishable foods have focused on optimal dynamic pricing to achieve higher profitability using various numerical mathematical assumptions. ...
... Strategic consumers are aware of future price adjustments, and decide whether to purchase now at a high price or wait until the price decreases. Li, Tang, O'Brien and Wang(2006), Liu, Tang and Huang(2008), and Wang and Li(2012) Previous studies on the pricing of perishable products presented optimal or dynamic pricing models based on various demand assumptions. Conversely, the demand assumptions considered in prior studies have not sufficiently considered the specific situation that food consumers frequently face when purchasing perishable foods. ...
... Óskarsdóttir & Oddsson [13] Necessity of traceability systems to monitor quality and technology capable of being incorporated on a traceability system Xiaofeng et al. [55] developed a model that allows to determine the correct allocation of commodities in order to maximize profit. The authors expanded on models for price variation in the sense that it also considers the entry of materials and not only the exit. ...
... Heese [54] Inventory management using wireless sensors Xiaofeng et al. [55] Model for the correct allocation of commodities in order to maximize profit Hu et al. [56] Model for a traceability system usable in high probability of contamination scenarios and algorithm to determine contamination Wang & Li [57] Fixed expiration dates are inefficient to expose variations subjected to products; Algorithm to apply discount according to quality variation to keep demand Grunow & Piramuthu [58] Fixed expiration dates as inefficient means to assess product quality and models to determine quality using RFID and profit analysis Piramuthu et al. [59] Traceability systems as tools to increase recall efficiency and model to determine economic loss reduction due to the use of those systems Hertog et al. [60] Algorithm to evaluate quality decay and to distribute perishables based in FEFO ...
Traceability can be a tool for safety and quality assurance for food perishables as well as for process optimization and economic gain. However, it is often considered mere bureaucracy and an economic burden. Such is prevalent in small and medium-sized enterprises. As they constitute most of food sector, the adoption of traceability systems is quite slow and mostly to satisfy legal requirements.
To determine the main advantages and disadvantages of traceability models, implementation and technologies, a literature review and Small and Medium Enterprises (SME) focused analysis was performed in the part Ⅰ of this study.
In Part Ⅱ, a low cost open-source traceability focused on food safety and quality is developed. It is based on HACCP flowcharts to define gateways for quality evaluation and encompasses external verification and product history maintenance.
Economic gains, more quality and safety, better efficiency and a more direct contact with consumers are some of the main advantages. High implementation costs, poorly defined benefits, lack of compatibility, consumer focused perspective and exposure of sensitive information are some of the main issues.
This study serves to expose these issues and suggest solutions, aiming to encourage the adoption of traceability systems, with last-end benefits to producers, retailers, and consumers.
... In the food supply chain, the RF-based solutions have been applied for new warehouse management approaches dedicated to perishable products ( Van der Vorst et al., 2007;Martinez-Sala et al., 2009;Grunow & Piramuthu, 2013;Piramathu & Zhou, 2013). Moreover, this technology can maximize profits of selling perishable food through price adjustment based on real-time product quality and values (Liu et al., 2008). Consumers, in fact, can be less likely to purchase perishable goods when their expiration dates are near. ...
... The selling price varying accordingly with the following equation 5 (Liu et al., 2008): ...
Post-harvest losses of perishable products strongly depend on inefficiencies of the entire supply chain. In particular, these inefficiencies can be reduced by optimizing the warehouse management, taking into account the remaining shelf life of the product, and matching it to the requirements of the subsequent part of the handling chain. The replacement of First In First Out picking rule with Last Shelf Life First Out policy has been proved to improve the overall performance of the supply chain. The practicability of such approach is related to the possibility of monitoring the deterioration rate of the products and of predicting the residual shelf-life, that is mainly influenced by harvesting conditions. Shelf-life based inventory management policies are seldom employed, generally due to the difficulties in the assessment of the environmental conditions. Such problem can be overcome by means of an automatic system able to acquire the volatile organic compound emitted by the product and of a communication tool that allows sending the information to be processed. RF technologies can be efficiently employed to reach this purpose in order to establish a shelf-life based prediction model. The present paper reports the technical/economic analysis related to the employment of an RF warehouse management system in an agro-industrial supply chain based upon an experimental campaign performed in a real case study.
... In order to attract customers, large retailers are offering on their shelves a greater number of fresh products, allowing them to compete against the more traditional channels that usually specialize in those items [39] . Li et al. [35] report that more than 81% of the sales of the grocery retailing industry in the US in 2009 corresponded to food and beverages, and 63% of those were products with a limited shelf life, i.e. more than 50% of this sales channel are perishable units. ...
... Liu et al. [39] define dynamic pricing as the assignment of different prices to items of the same category, considering their individual characteristics and changes to their status. Elmaghraby and Keskinocak [19] identify three characteristics to categorize the literature dealing with dynamic pricing: replenishment vs. no replenishment of inventory; dependent vs. independent demand; myopic vs. strategic customers (i.e. ...
This paper deals with dynamic price strategies to reduce food and other perishable products spoilage. A deterministic mathematical model is proposed to study the influence of a number of factors, such as price elasticity of demand, age-sensitivity of demand and age profile of initial inventory, on revenue and spoilage. A parametric, bi-objective approach is considered with the aim of estimating the existing trade-offs between revenues and spoilage. The effects of price discounting are different in each scenario and also depend on the speed at which the price is reduced as it ages. Although a dynamic price strategy helps reduce spoilage, its effect on total revenue depends heavily on the scenario. In some specific cases identified below in the paper, total revenue can slightly increase or, at least, maintain its level. In other scenarios, the spoilage reduction comes as a loss in total revenue that can go from small to significant, depending on the scenario and the speed of the price discounting strategy. The proposed approach allows the quantification of the available trade-offs for each scenario. It also allows the analysis of the age distribution of units sold and their respective revenue contribution.
... For example, management of inventories, supply chains, health care systems, among others. Many works deal with the improvement of inventories via RFID technology, see for example, Doerr et al. [3], Kok et al. [9], Liu et al. [12], Wang et al. [25], Rekik et al. [19,20], Pei and Klabjan [16], and Rekik [21], just to name a few. Also, there are some papers that deal with the application of RFID in supply chains such as Porter et al. [17], Wang et al. [25], Mourtzis et al. [14], Lin [11], Chang et al. [2], Lee and Lee [10] and Rekik [21]. ...
... Then, this message is transmitted with interference from the environment p(y|x) (4) which alters the original message (5). Next, a tag decodes (6) the message received Ŵ (7) and simultaneously sends a message M [ M Ŵ (8) to a reader, which now acts as a receiver, Fig. 1 Communication reader-tag through the second memory less communication channel (9) which is also subject to interference from the environment p(û|u) (11) and also altered (12). Finally, the reader decodes (13) the message _ M (14). ...
Radio frequency identification (RFID) is a technology with numerous benefits in applications where objects have to be identified automatically. However, cost, fragile tags, collision and reading errors are some of issues to be concerned with in an RFID implementation. Mainly, this paper proposes a method for tag identification and a method for the selection of the binary codes to program on the tags in order to facilitate the identification process. For the identification method a heuristic based on Hamming distance is developed where the basic idea is to utilize the information obtained in consecutive read attempts to help identify a tag. For the selection method three models based on Hamming distance are also developed which strive to find the set with the greatest dissimilarity among the codes. Computer simulations are performed to verify the validity of the proposed methods.
... Online monitoring systems, such as wireless sensor networks (WSN) in conjunction with RFID and data loggers, present a solution to traditional data collection, processing, and decision-making problems in realtime and helps in redesigning the supply chain. RFID assists in determining whether a product's price should be high or low based on how well the product is performing at the time of purchase rather than pre-existing supermarket pricing [45,61,65]. Reefer vehicles use RFID and GPS technologies for product identification, visibility, tracking, and real-time value in various transportation stages; ensuring cleanliness, safety, and intact quality to increase customer value [33,34,42,47,92,93]. ...
Diversification into horticulture has become the primary source of livelihood for smallholders. The study analyses trends, theories, settings, constructions, research methods, and findings based on Keynes’ “confidence theory”, the absolute income hypothesis, and the human development index. Using the Theory, Constructs, Characteristics, and Methodology (TCCM) framework, the paper offers a Systematic Literature Review of 67 scholarly research papers with fifty or more citations published between 2000 and 2021 in EBSCO, Scopus, Web of Science, and Google Scholar databases. The study advocates that a Cold Chain must be considered with the intervention of contract farming, government, cooperative or farmer-producer organisations to reap maximum benefits from horticultural production during the off-and-on seasons rather than selling to opportunistic intermediaries. The study also has important implications for future researchers and policy-makers but, most importantly, offers motivation to the investors for safe investment decisions in the cold chain infrastructure development for higher returns to producers cutting across their geographical, sociological, or economic contexts.
... Despite various studies in the literature, limited research has been conducted on store operation issues in the grocery supply chain addressing these challenges with dynamic pricing and smart technology integrations for perishable products [9]. Liu et al. [79] developed a dynamic pricing model for retailers to maximise the profit from selling perishable products with real-time information on product quality with RFID technology. Wang and Li [80] introduced a pricing strategy model based on dynamically identified food shelf life through tracking and tracing technologies such as RFID and TTI to reduce food waste and maximise the retailer's profit. ...
The unexpected emergence of the COVID-19 pandemic has changed how grocery shopping is done. The grocery retail stores need to ensure hygiene, quality, and safety concerns in-store shopping by providing “no-touch” smart packaging solutions for agri-food products. The benefit of smart packaging is to inform consumers about the freshness level of a packaged product without having direct contact. This paper proposes a data-driven decision support system that uses smart packaging as a smart product-service system to manage the sustainable grocery store supply chain during outbreaks to prevent food waste. The proposed model dynamically updates the price of a packaged perishable product depending on freshness level while reducing food waste and the number of rejected customers and maximising profit by increasing the inventory turnover rate of grocery stores. The model was tested on a hypothetical but realistic case study of a single product. The results of this study showed that stock capacities, freshness discount rate, freshness period, and quantity discounts significantly affect the performance of a grocery store supply chain during outbreaks.
... Dynamic pricing may be defined according to Liu et al. [27], as the attribution of different prices over time to a same product or to different products from the same category, considering the individual characteristics of each product or changes in its qualitative state. The task of setting dynamic prices on horticultural products, as perishable goods, based on multiple criteria proves to be arduous and inaccessible to all small retailers, as it requires them to detain information, in real time, about variables such as rate of deterioration, time of onset of deterioration, demand, price elasticity of demand, or unit storage cost, that are parameters considered in numerous pricing models. ...
A decision support system (DSS) was developed to help reduce food waste at traditional food retailers while selling fresh horticultural products, but also to promote food safety and quality. This computational tool includes two major functions: (1) the prediction of the remaining shelf life of fresh horticultural product, namely lettuce, onion, carrot, and cabbage based on its microbial growth status, governed by extrinsic and intrinsic parameters (temperature, water activity and pH, respectively). The remaining shelf life of the studied horticultural products is determined by using the online predictive food microbiology tool-the Combined Database for Predictive Microbiology (Combase). The time to reach the infectious doses of bacteria considered in the study for each of the four horticultural products are predicted; (2) the calculation of the dynamic price of the produce that should be set each day, depending on the predicted end of the marketing period to increase the demand and potential for sale to the final consumer. The proposed dynamic pricing model assumes a linear relation with the remaining shelf life of the analyzed vegetable to set the selling price. The shelf life determined by the DSS for optimal storage conditions is, in general, conservative, ensuring food safety. The automatic dynamic pricing gives new opportunities to small retailers to manage their business, fostering profit and simultaneously contributing to reduce food waste. Thus, this decision support system can contribute to the sustainable value of reducing food waste by providing information to small grocers and retailers on the safety of their perishable status depending on storage conditions and allowing them to suggest a fair price depending on that quality.
... To effectively develop and implement comprehensive chain-wide traceability systems, these issues need to be addressed, if not, traceability systems will lose most of their utility and benefits. Useful tools to incorporate in traceability systems were described by Sloof et al. [42] , Hsu et al. [43] , Heese [44], Xiaofeng et al. [45], Kwok [41]. Mainly, these authors describe elements that could be useful additions to traceability systems on an internal level. ...
It is relevant for traceability systems to have a common structure for information exchange. Without it, these systems lose much of their utility as they will only be usable internally and will have reduced capacity to add value to products and manage recalls. Based on extensive literature review, a non-proprietary framework for traceability was developed. This framework encompasses whole food supply chains and aims to maintain records of quality and safety while not necessitating mature IT capabilities, uncommon characteristic of SME's. As such the volume of information is divided between all stakeholders according to their necessities and funding capacities. Most of the information is stored by regulators as they have access to more funding. This improves the ease and flexibility of implementation of traceability systems by the companies. Tools were developed and simulated, and all results are presented, clearly demonstrating the capability for quality information sharing through food supply chains which in turn can increase transparency between consumers and producers as well as adjusting the quality to the desired end use.
... ,Xiaofeng et al. (2008),Kwok et al. (2008) ,Woo et al. (2009) ,Hu et al. (2009) , Bakker et al. (2012,Wang & Li (2012) ,Verdouw et al. (2013),Pahl & Voß (2014) ,Hertog et al. (2014),Qian et al. (2017) andÓskarsdóttir & Oddsson (2019b) present elements that could be useful additions to traceability systems on an internal level. These elements come mostly in the form of models and algorithms for tasks as diverse as determining granularity, internal modeling, quality decay, contamination and allocation of commodities.Bechini et al. (2006),Kelepouris et al. (2007),Bechini et al. (2008),Thakur & Hurburgh (2009), Olsen & Aschan (2010 and present elements that could be useful on an external level. ...
The onset of new technologies and new procedures for food production has reduced the familiarity and capability of consumers to discern the quality if products bought, as well as being unable to verify if all health and safety regulations were complied with. In order to help resolve such problems, an architecture for a quality-based traceability system was created. As this architecture also encompasses regulators, risk is reduced for compliant enterprises and profit can be increased as the monitoring necessary to comply with the architecture can also be used for internal optimization purposes.
... A3. The demand function in the first phase is linear and decreasing with respect to each decision variable (You, 2005;Liu et al., 2008). ...
A large reservoir of frozen human embryos is a negative outcome of their cryostorage for in vitro fertilization treatments. The existence of unused stored embryos, referred to herein as “remaining embryos”, places the service provider (usually a hospital) in a fragile situation. This is especially the case when the issue of discarding unused embryos arises or when unexpected failures associated with preserving the inventory occur. Moreover, the absence of intrinsic incentives for couples to donate embryos to the secondary market, as well as the increased operational costs for maintaining a viable storage service over time, further challenge this unique service. The present paper develops an optimization model that determines a charging scheme for the couples using the storage service and a payment scheme for couples who agree to provide their remaining embryos as a source for the secondary market. Couples who do not agree to receive payment for their remaining embryos are charged for discarding them (referred to herein as the “discarding payment”). While this model includes rewards and motivates couples to provide embryos for the secondary market, it also reduces the remaining inventory, thereby responding to the two key problems of embryo storage. The analytically developed model is used to derive optimal solution algorithms. A numerical example and a sensitivity analysis of the key parameters are presented.
... Banerjee and Agrawal [1] propose a discounting policy where an item shows no loss in freshness (quality) for some time and then loses its freshness either linearly or exponentially in time. Liu et al. [9] propose a model where pricing decisions are based on the real-time value of items. This study is based on the supposition that radio-frequency identification (RFID) technology is available for instantaneous monitoring. ...
In this paper, we consider a store that sells two vertically differentiated items that might substitute each other. These items do not only differ in quality and price, but they also target two different customer segments. Items deteriorate over time and might require price adjustments to avoid cannibalization. We provide closed-form solutions for pricing and ordering of these items that lead to key managerial insights.
... Dynamic Price Optimization: A notable change over the past decade has been some retailers' adoption of dynamic pricing (cf., Elmaghraby and Keskinocak 2003;Grewal et al. 2011;Liu et al. 2008). Three factors have contributed to this phenomenon: the increased availability of demand data, the ease of changing prices due to new technologies, and the availability of business analytics and tools to support rapid price changes. ...
Retailer pricing is a key element of retailer strategy that critically shapes retailers’ fortunes. Many retailers live and die by their pricing strategy. This article reviews emerging retailer pricing trends and practices and offers a framework to guide retailers toward profitable pricing strategies. It builds on previous work on retailer pricing (e.g., Bolton and Shankar 2003; Bolton et al. 2007; Grewal et al. 2011; Kopalle et al. 2009; Shankar and Bolton 2004).
We begin by describing the current retailer environment, focusing on how changes in consumer demand, competition and cost over the past decade have created pricing opportunities and challenges. Next, we highlight factors that have contributed to retailer bankruptcies and store closings, as well as mergers and acquisitions, and identify key learnings regarding strategic pricing. Then, we discuss how retailers are facing radically new forms of competition from adjacent markets, discount outlets, resale stores and the sharing economy – and suggest some ways of forestalling competition. The following section describes systematic changes in consumers’ shopping habits across different channels and touchpoints, including how shoppers have responded to increased direct-to-consumer activities by manufacturers, growth in online intermediaries and multi-channel or omnichannel retailing. These changes lead to our reflections on how retailers must adopt more nuanced pricing strategies tied to the customer experience. We then focus on the profound effects of technology on retailing, including the pervasiveness of mobile services. Last, we turn to a review of current pricing practices and (especially) the use of dynamic pricing optimization and differentiated pricing based on hybrid bundles of goods and services. The article closes by offering a framework to guide retailers in developing a coherent pricing strategy.
... This concept was firstly introduced by the airline industry and then its application was widened to be used in different perishable products [5]. Dynamic pricing is one of the pricing strategies that was defined by Liu, Tang, and Huang [6] as the assignment of different prices to the product items of the same category, considering the individual product characteristics or the changes of the product status. Retailers use dynamic pricing to give the consumer a tradeoff between price and quality of perishable product. ...
... a) Products with a consumed shelf life less than 0.4 are sent to the final destination and sold at the price of 6 €/kg while the products that go beyond this threshold are sold in the local market with an average price of 4 €/kg; b) Products are sold according to the following Eq. (5) (Liu et al., 2008): ...
In today's competitive global market it is mandatory to improve warehousing operations integrating economic, environmental and social aspects. The recent advancement in monitoring technologies can greatly improve the performance of the food supply chain reducing product loss. In particular, in the perishable food supply chain, initially inventory operations are critical because they manage the material flows in very variable conditions. The deterioration level of the products as well as the market demand are the main factors that can influence warehouse strategy. This research aims to consider the application of sustainability principles in the context of warehouse storage, evaluating the combined decision of implementing shelf life based picking policy and pricing strategy. In particular, the proposed approach is based on a referenced shelf life model and on the Monte Carlo simulation. Three different pricing scenarios in a case study for the management of the warehouse were defined and their Economic Traceability Lot was determined on the basis of an economic feasibility analysis. Finally, the carbon footprint for each scenario was determined in terms of emissions produced by temperature-controlled transportations and for the landfilling of product wasted.
... Recently, pricing and inventory decisions are also studied with the presence of RFID because they can be affected significantly after RFID is implemented. For example, Chen et al. (2011) measure the value of RFID by a multi-stage pricing and inventory model, and Liu et al. (2008) study the benefits of RFID and provide an effective method for pricing and ordering decision. ...
This paper considers a supply chain consisting of one supplier and one retailer who jointly invest in item‐level radio frequency identification (RFID) by considering their demands and inventories. Since the supplier can be negative to adopt RFID, the main objective of this study is to design an effective mechanism that maximizes the profits of both players and the whole supply chain by implementing item‐level RFID. For this objective, we propose a novel revenue‐cost‐sharing (RCS) contract based on the bargaining game as the incentive to encourage the implementation, and numerical results show that the RCS contract is considerably more effective than the wholesale‐price contract for supply chain coordination. Moreover, we show that the retail supply chain can be coordinated perfectly under the RCS contract when the thresholds of the revenue/cost sharing rates are set appropriately. This study provides significant managerial insight into the incentive and coordination strategy to implement item‐level RFID in the retail supply chain.
... Many researchers have studied the characteristics of fresh produce which distinguish them from other supply chains. These characteristics can be listed as limited shelf life, perishability, delicateness and seasonality etc. (Kaipa et al. 2011;Aramyan et al., 2007;Xhoxhi et al. 2014; Rais and Sheoran, 2015;Liu et al. 2008;Rolfe et al. 2006;Aramyan and Kuiper, 2009;Nakandala et al. 2016). There are several reasons, which are associated with fresh produce price fluctuations. ...
... Dynamic Price Optimization: A notable change over the past decade has been some retailers' adoption of dynamic pricing (cf., Elmaghraby and Keskinocak 2003;Grewal et al. 2011;Liu et al. 2008). Three factors have contributed to this phenomenon: the increased availability of demand data, the ease of changing prices due to new technologies, and the availability of business analytics and tools to support rapid price changes. ...
Retailer pricing is a key element of retailer strategy that critically shapes retailers’ fortunes. Many retailers live and die by their pricing strategy. This article reviews emerging retailer pricing trends and practices and offers a framework to guide retailers toward profitable pricing strategies. It builds on previous work on retailer pricing (e.g., Bolton and Shankar 2003; Bolton et al. 2007; Grewal et al. 2011; Kopalle et al. 2009; Shankar and Bolton 2004). We begin by describing the current retailer environment, focusing on how changes in consumer demand, competition and cost over the past decade have created pricing opportunities and challenges. Next, we highlight factors that have contributed to retailer bankruptcies and store closings, as well as mergers and acquisitions, and identify key learnings regarding strategic pricing. Then, we discuss how retailers are facing radically new forms of competition from adjacent markets, discount outlets, resale stores and the sharing economy – and suggest some ways of forestalling competition. The following section describes systematic changes in consumers’ shopping habits across different channels and touchpoints, including how shoppers have responded to increased direct-to-consumer activities by manufacturers, growth in online intermediaries and multi-channel or omnichannel retailing. These changes lead to our reflections on how retailers must adopt more nuanced pricing strategies tied to the customer experience. We then focus on the profound effects of technology on retailing, including the pervasiveness of mobile services. Last, we turn to a review of current pricing practices and (especially) the use of dynamic pricing optimization and differentiated pricing based on hybrid bundles of goods and services. The article closes by offering a framework to guide retailers in developing a coherent pricing strategy.
... The use of the information collected by these systems to support decision-making and distribution strategies is also investigated (Shi et al., 2010). Such information can be applied to predict the demand for time sensitive food products based on their residual shelf life and to change the price accordingly (Liu et al., 2008). Other authors focus on the benefits of RFID application to the grocery sector, such as real-time tracking of product quality and shelf life prediction, with positive effects on spoilage reduction and identification and segregation of contaminated items (Kumari et al., 2015), which add to the operational and economic advantages that this technology brings business processes in any sector (Barjis and Fosso Wamba, 2010). ...
Purpose: This paper studies mobile services for supply chain management (SCM) in the e-grocery
sector. The authors investigate their diffusion and formulate policies in order to stimulate the
adoption.
Design/Methodology/Approach: A System Dynamics model is proposed for a short fresh food
supply chain (SC). The model predicts how product traceability, mobile payment, and time-based
delivery management functionalities contribute to the adoption of a SCM mobile application.
Findings: The three services drive the diffusion of the application. A high level of real time
information brings decreased inventory levels and more frequent order placing, leading to an
increased number of logistics transactions managed by the mobile application and growth in the
associated revenue for the service provider company.
Research Implications: The proposed study fosters research on overcoming the barriers that
prevent integration, collaboration, and better visibility in e-grocery SCs.
Practical Implications: This work constitutes a roadmap to identify the key enabling factors of egrocery
expansion.
Originality/Value: This is one of the few contributions focusing on increasing the efficiency of egrocery
SCs by applying management strategies supported by mobile devices.
... The time-temperature information also increases the efficiency of using price differentiation or dynamic pricing strategy, which assigns different prices to the items based on the item's status (e.g., quality, remaining lifetime). Liu, Tang, and Huang (2008) considered using real-time product quality data to set price and ordering quantity to maximise supermarket profits. When both price and demand depend on the remaining lifetime of products, using time-temperature information increases the retailer's profit (Herbon, Levner, & Cheng, 2014). ...
Radio frequency identification (RFID) technology, which enables real time data collection, has proposed as a promising solution to perishable inventory management. Research states that RFID technology has many benefits for perishable product, therefore; this paper presents an overview of RFID technology and its applications to perishable inventory management. The findings give a comprehensive review and support the managers in evaluating a decision to implement RFID. It helps the managers in making RFID investment decision and using RFID in inventory management for perishable products.
... There are several papers that deal with improving the management of inventories via RFID technology, see for example: Doerr et al. [9], Kok et al. [10], Liu et al. [11], Wang et al. [2], Rekik et al. [12], Pei and Klabjan [13], Rekik [14], just to name a few works. For a complete review of and future directions for RFID we refer the reader to the works of Ngai [15], Irani et al. [16], and Sarac et al. [17]. ...
An inventory problem of a company that specializes in cutting steel coils into rolls and sheets of steel is addressed in this paper. Rolls and sheets of steel require a high level of customization depending on the specifications by the end user. This causes complexity in the management of finished goods, mainly due to the wide variety of dimensions of the rolls and sheets that are in the storage area. Due to the great variety of products built for stock, it is not possible to define a specific location in the storage area to place a product. For a company located in México, recent data show that the percentage of obsolete inventory (items stored more than 90 days) is 7 %. The objective of this work is to reduce this percentage to 0 %. From a time study, it was learned that searching for finished inventory averaged 15.5 min. This activity consumes a large amount of the available forklift operator time. This means that in situations during which the forklift operator is pressed for time, it may be necessary to abandon the search for the correct finished products in the storage, and instead ship products of more recent production. Over time, the repetition of this event generates increased rates of obsolete inventory. The proposal to solve the problem was to reduce the search times through the implementation of a system that identifies inventory using RFID technology. This will improve the quality of the stored information, and therefore reduce the rate of obsolescence.
... EP.4 ED.1/ED.6 EP.3 [Chandec et al., 2005] [De Kok et al., 2008] [Rekik et al., 2008] [Szmerekovsky et Zhang, 2008] [Uçkun et al., 2008] [Wang et al., 2008] [Dai et Tseng, 2009] [Rekik et al., 2009] [Rekik, 2010] [Sari, 2010] [Lee et al., 2011] [Chandec et al., 2005] [Jarugumilli et Grasman, 2007] [Liu et al., 2008] [Poon et al., 2009] [Gonzalez et al., 2006] [Ilic et al., 2007] [Vrba et al., 2008] [Guo et al., 2009] [Chen et al., 2010] [Jakkhupan et al., 2010] [Sundaram et al., 2010] [Ko et al., 2011] Comme deuxième constat nous remarquons que les problématiques de distribution et de la dynamique des prix n'ont pas encore été analysées largement comme la problématique de gestion de stock. Pour les problématiques de distribution la technologie RFID va servir pour avoir les données exactes en temps réel mais grâce à cette technologie nous pouvons aussi appliquer le transbordement et développer un peu plus son impact. ...
... RFID technology enables firms to monitor and manage the freshness (or deterioration) of products. By knowing the state of inventories, delivery times, or whereabouts of items in transit or transportation (Pahl, 2011) firms can increase product visibility and process transparency, and use integrated and automated data capture (Liu, Tang, and Huang, 2008). The disadvantage of increased cost for the tags is compensated by several benefits; e.g. ...
INTRODUCTION Logistics information systems (LIS) are specially designed to support all elements of logistics processes, including coordination of logistics activities, material flow, and inventory replenishment (Douglas M. Lambert, 1998). By necessity, this involves a combination of hardware and software in addition to supporting data exchange and capturing technologies, supported over the interconnected manufacturing and logistics phases between different companies by specialised manufacturing and logistics information systems (MLISs). It is recognised that overall supply chain performance can be improved by using information technology (IT) and while many firms have enabled transactional processing, they still request improvements to enable IT to support improved planning and decision-support applications (Sundarakani, Tan, & Over, 2012). They have been used by both specific firms, as well as being a core enabler for many third-party logistics (3PL) firms to whom other companies outsource their logistics requirements (Srivastava & Wood, 2011). This chapter examines individual elements of MLIS (relating to identification, warehouse management systems, transport management systems, quality management, information exchange, and enterprise resource planning (ERP) systems) and its key use to both capture and process transactions and support improved decision making. This is aided by the resurgence of interest in Radio Frequency Identification (RFID) technologies to support identification and tracking of inventory. Finally, we examine the weaknesses and challenges of MLIS and discuss future trends and approaches that will offer value in the near future.
... Zhao and Zheng (2000) studied a dynamic pricing model for perishables under non-homogeneous demand when the intensity of the consumer arrival process and the distribution of reservation price vary over time. Furthermore, Li et al (2006) and Liu et al (2008) suggest that retailers can increase profits with dynamic price management of perishable foods using improved food value trace ability. This is achieved by dynamic alteration of prices based on more accurately identified food shelf-life variations. ...
Numerous studies have investigated dynamic pricing for perishable products. The models have been designed to determine an optimal pricing structure and improve retailer performance. Previous studies on pricing models for perishable products have considered various assumptions of consumer demand and purchasing behaviour from deterministic and stochastic price-dependent demands to myopic and strategic consumer purchasing behaviour. They have not, however, considered consumer demand in reaction to a situation where the display stock of a particular product has different qualities (such as shelf-life) and prices available at the same time. This is particularly applicable in the analysis of dynamic pricing models for perishable foods. In this paper, we investigate the impact of frequency of discount during a product’s selling period on retailer performance, by considering changes in consumer purchasing behaviour in response to the display stock of a particular food product having different remaining shelf-life and prices. On the basis of a literature review and data obtained from interviews with food retailers, a simulation study is performed to compare the performance of different pricing policies. The results demonstrate the benefits gained by adopting more dynamic price policies.
... Zhao and Zheng (2000) studied a dynamic pricing model for perishables under non-homogeneous demand when the intensity of the consumer arrival process and the distribution of reservation price vary over time. Furthermore, Li et al (2006) and Liu et al (2008) suggest that retailers can increase profits with dynamic price management of perishable foods using improved food value trace ability. This is achieved by dynamic alteration of prices based on more accurately identified food shelf-life variations. ...
Purpose
The purpose of this study is to compare the impact of multi‐period pricing, as an example of more dynamic pricing and discounting strategy with that of a present less dynamic alternative on customer satisfaction and consumers' willingness to make trade‐offs between price and remaining shelf‐life.
Design/methodology/approach
The authors conducted interviews with three food retail managers in South Korea to gather practical information about the management of perishable foods, which informed the design of a survey in which consumers in South Korea were questioned about their perceptions of the two strategies, with respect to nine perishable food products in three categories. The data collected were analysed by one‐way ANOVA and the t ‐test.
Findings
The findings of this research present an improved understanding of the impact of a multi‐period pricing strategy on consumer satisfaction and customer behaviour for perishable foods. The conclusions have the potential to significantly assist food retailers to understand the consumers' perspective on the benefits of a more dynamic pricing strategy.
Practical implications
The findings suggest that food retailers can enhance customer satisfaction by offering an earlier but lower discount, and increasing it as perishable food items approach their expiry date, rather than a higher discount when the expiry date is imminent.
Originality/value
The findings in this study are significant since they serve as the first step in measuring the value of dynamic pricing approaches that provide better trade‐off options between price and remaining shelf‐life from consumers' perspectives.
... Partial/co mplete Suppliers usually offer some credit periods to the retailers in order to stimulate the demand for the products they produce. Chang and Dye (1999), Hariga (1997), , Chakrabarty et al., (1997), Begum et al., (2010-a), Giri et al., (1996), Gosh and Chandhuri (2005) (2008), Liu et al., (2008), Teng and Ouyang (2005) Deterioration costs Chiu (1995), Manna and Chandhuri (2006), Begum et al., (2010-b), Ghosh and Chandhuri (2005) ...
... In scientific literature, shrinkage is often treated by means of simulation models (Liu et al., 2008), although those studies have limited practical fallouts. Empirical approaches are proposed by Huber (2007) and Karkkainen (2003). ...
The objective of this paper is to point out how Radio Frequency Identification (RFID) technology can be used to improve the First In First Out (FIFO) policy of fresh products warehouses in the large-scale retail channel. The relatively short shelf life of fresh products forces to maintain a punctual control of the rotation of cases in the warehouse. The implementation of an RFID system enables to real time monitor the supply chain processes an item is subject to; in particular, the present work focuses on the process of shelf replenishment, by moving cases from the backroom to the shop floor. By means of an accurate monitoring of this process, the errors caused by noncompliance with the FIFO policy were pointed out, and the economic savings resulting from the use of RFID technology in that context were evaluated. Results show that the deployment of RFID technology has potential to help manage the FIFO policy of fresh products, thus generating interesting savings for the food supply chain.
... Due to the quality deterioration nature of perishable products and due to the health risks involved, end-toend traceability becomes significant in the agri-food sector (Nambiar, 2009). Several applications of a agri-food supply chain surveillance system based on RFID tags to improving traceability of food health risks are considered by the works of Amador et al. (2009), Yan et al. (2008, Abad et al. (2009), Hsu et al. (2008, Liu et al., (2008), and others. ...
We consider the problem of inventory management of perishable products, typical examples of which include food, beverage, and pharmaceuticals. Retailers increasingly use RFID-supported time–temperature-indicator-based automatic devices (TTI-based ADs) to keep track of the age and quality of perishable items in stock and to reduce the risk of selling damaged products to customers. They also apply dynamic pricing to entice consumers to purchase items that approach their expiry dates. The problem is to maximize the retailer's profit while taking customer satisfaction into account. We first formulate the problem as a deterministic non-linear mixed integer program and apply a local search algorithm to approximately solve the problem. We then conduct sensitivity analysis based on extensive simulation experiments to evaluate the impacts of adopting TTI-based ADs and other factors on the solution under different scenarios.
Purpose
The current research has developed a novel method to update the decisions regarding real-time data, named the dynamic adjusted real-time decision-making (DARDEM), for updating the decisions of a grocery supply chain that avoids both frequent modifications of decisions and apathy. The DARDEM method is an integration of unsupervised machine learning and mathematical modeling. This study aims to propose a dynamic proposed a dynamic distribution structure and developed a bi-objective mixed-integer linear program to make distribution decisions along with supplier selection in the supply chain.
Design/methodology/approach
The constantly changing environment of the grocery supply chains shows the necessity for dynamic distribution systems. In addition, new disruptive technologies of Industry 4.0, such as the Internet of Things, provide real-time data availability. Under such conditions, updating decisions has a crucial impact on the continued success of the supply chains. Optimization models have traditionally relied on estimated average input parameters, making it challenging to incorporate real-time data into their framework.
Findings
The proposed dynamic distribution and DARDEM method are studied in an e-grocery supply chain to minimize the total cost and complexity of the supply chain simultaneously. The proposed dynamic structure outperforms traditional distribution structures in a grocery supply chain, particularly when there is higher demand dispersion. The study showed that the DARDEM solution, the online solution, achieved an average difference of 1.54% compared to the offline solution, the optimal solution obtained in the presence of complete information. Moreover, the proposed method reduced the number of changes in downstream and upstream decisions by 30.32% and 40%, respectively, compared to the shortsighted approach.
Originality/value
Introducing a dynamic distribution structure in the supply chain that can effectively manage the challenges posed by real-time demand data, providing a balance between distribution stability and flexibility. The research develops a bi-objective mixed-integer linear program to make distribution decisions and supplier selections in the supply chain simultaneously. This model helps minimize the total cost and complexity of the e-grocery supply chain, providing valuable insights into decision-making processes. Developing a novel method to determine the status of the supply chain and online decision-making in the supply chain based on real-time data, enhancing the adaptability of the system to changing conditions. Implementing and analyzing the proposed MILP model and the developed real-time decision-making method in a case study in a grocery supply chain.
In this chapter, we will discuss the applications of various martechs in different activities and operations related to digital marketing, including value creation and capture; customer collaboration and co-creation; digital segmentation, targeting and positioning; integrated digital marketing communication; digital branding; digital consumer behavior; product management and development; price management; delivery and tracking; customer relationship, experience and journey; digital platforms and digital marketing channel management; digital selling and retailing; and digital evidence management.
This study delves into the challenges and economic implications of managing deteriorating products subject to deterioration over time. It emphasises the limitations of conventional inventory models and introduces the Weibull distribution as an effective model for understanding the deterioration rate of such products under uncertainty. The economic impact of deterioration is explored, highlighting the potential for increased profit by reducing perishable waste. The necessity for proficient inventory management systems in the face of a growing market for deteriorating products is discussed. Preservation technologies are proposed as a solution to reduce waste, but their use raises environmental concerns, necessitating appropriate carbon taxes or cap-and-trade policies. The study also emphasises the benefits of dynamic pricing in navigating the fluctuating utility and demand of decaying products. Competition in the market for deteriorating products is analysed for a two-echelon supply chain scenario, revealing insights into the impact of revenue-sharing contracts on retail prices and overall supply chain profitability. We provide a comprehensive overview of the intricate considerations involved in managing deteriorating products in the supply chain, addressing economic, environmental, and competitive aspects.
In this study, a multi-period dynamic pricing model in a two-echelon supply chain consisting of a retailer and a manufacturer is developed for a deteriorating product with a fixed shelf life. The demand at the retailer in each period is considered to be a function of the retail price, inventory on stock, reference price, and product freshness. Preservation technology investment (PTI) is considered to retard the rate of deterioration with carbon emission to keep the process green. Centralised and decentralised models are developed considering dynamic pricing for the retailer and static pricing for the manufacturer with a variable replenishment cycle length. Algorithms have been developed to obtain the optimal replenishment cycle length, retailer’s end of inventory level, retail price, PTI and discounted total profit for the retailer/manufacturer/supply chain. We study the generated trade-off between PTI, benefits of reduced deterioration rate and cost of carbon emission. The numerical studies suggest that supply chain profit can be greatly improved with efficient PTI and dynamic pricing policy. We also find that the initial reference price plays a key role in improving the profit.
Purpose
The findings of this paper throw light on the focal research areas within RFID in the supply chain, which serves as an effective guideline for future research in this area. This research, therefore, contributes to filling the gap by carrying out an SLR of contemporary research studies in the area of RFID applications in supply chains. To date, SLR augmented with BA has not been used to study the developments in RFID applications in supply chains.
Design/methodology/approach
We analyze 556 articles from years 2001 to date using Systematic Literature Review (SLR). Contemporary bibliometric analysis (BA) tools are utilized. First, an exploratory analysis is carried, out revealing influential authors, sources, regions, among other key aspects. Second, a co-citation work analysis is utilized to understand the conceptual structure of the literature, followed by a dynamic co-citation network to reveal the evolution of the field. This is followed by a multivariate analysis is performed on top-100 cited papers, and k-means clustering is carried out to find optimal groups and identify research themes. The influential themes are then pointed out using factor analysis.
Findings
An exploratory analysis is carried out using BA tools to provide insights into factors such as influential authors, production countries, top-cited papers and frequent keywords. Visualization of bibliographical data using co-citation network analysis and keyword co-occurrence analysis assisted in understanding the groups (communities) of research themes. We employed k-means clustering and factor analysis methods to further develop these insights. A historiographical direct citation analysis also unveils potential research directions. We observe that RFID applications in the supply chain are likely to benefit from the Internet of Things and blockchain Technology along with the other machine learning and visualization approaches.
Originality/value
Although several researchers have researched RFID literature in relation to supply chains, these reviews are often conducted in the traditional manner where the author(s) select paper based on their area of expertise, interest and experience. Limitation of such reviews includes authors’ selection bias of studies to be included and limited or no use of advanced BA tools for analysis. This study fills this research gap by conducting an SLR of RFID in supply chains to identify important research trends in this field through the use of advanced BA tools.
This study targets to measure the effect of dynamic
pricing offers on the purchase intentions of consumers for a winter holiday by
taking into consideration a moderated mediator role of perceived risk on this
effect. The study employs an experimental design with discount level and timing
of the offer (offer recency) as the manipulated conditions. The findings
confirm that discount offers have positive direct effect and perceived risk has
a negative direct effect on purchase intentions. The levels of discount and perceived
risk, independently from each other, determine the level of purchase
intentions. On the other hand, the effect of discount offers on purchase
intentions is mediated by the perceived risk level of consumers. Finally, the
timing of the discount offers moderates the effect of perceived risk on
purchase intentions and eventually generates a moderated mediation role for
perceived risk on the influence of discount offers on purchase intentions.
Based on the findings of this study, some practical implications are provided.
p>Indonesian Goverment launched rice program for poor households, called as Program
Beras Miskin (RASKIN) with the aim to help poor families in the avaibility of rice. Raskin
program is still raises problems so that the benefits received are not significant for poor families.
The purpose of this study was to describe about distribution proccess of Raskin especially in
Bekasi City, mapping constraints experienced in the implementation of Raskin distribution and
make a design of Rice ATM information system for Raskin distribution in Bekasi City. The
research methodology used in this study began with observation of the research object to obtain
preliminary data in Raskin general guidlines, number of seeds of households needs and Raskin
beneficiary mapping in study area. Research result is a design of system information with RFID
implementation to improve the effectiveness and the achievement of Raskin objectives program.
Keywords: Raskin, RFID, System Information.</p
Firms that seek to undertake the course of price discrimination may face obstacles. Answering the question as to whether the implementation of price discrimination for perishables is beneficial from the perspective of the seller depends on the total costs of acquiring both consumption information and the technology. We analyze two models. The first model assumes that sufficient consumer information (e.g., purchasing history) and the technology for applying price discrimination are available to the decision maker (i.e., the retailer). The second represents the common situation where the price is identical to all, that is, price discrimination is not carried out. The optimal prices are derived. Our modeling indicates that even under deterministic demand mode, lost sales or surplus can be observed due to the absence of consumer information about sensitivity to a product's remaining time until expiration. Simulations for evaluating the effect of random demand noise on the relative profits obtained by both models surprisingly show that the gap between them decreases under demand noise. Numerical illustration indicates that the subjective prediction made by the retailer, who has no accurate consumer information about demand sensitivity, has a significant impact both on the proportion of the consumer population that benefits from possible price discrimination and on the retailer's expected profits.
Efficient pricing and replenishment decisions have the potential to yield significant increase in revenues. A widespread assumption in existing models of expiring inventories is that consumers are homogeneous in their sensitivities towards the factors that influence demand. Yet, there are numerous scenarios in which consumers may vary in terms of their sensitivities. In addition, most of the current literature addresses expiring inventories for which the perceived quality deteriorates over time, while models of perishables for which the quality remains stable over time (e.g., electronic devices) or increases (e.g., green bananas, or wine) have rarely been suggested. We analytically analyze a joint pricing and replenishment optimization model that aims to maximize the retailer's profit and is general enough to consider these three types of expiring inventories, as well as heterogeneity in consumer sensitivities. In particular, our model considers the effects of remaining shelf-life, price and perceived quality on demand. We obtain the optimal price given any cycle length and derive the FOC (first order condition) for obtaining the optimal cycle length. By numerical study, we show that the seller might gain significant profits in cases where consumers are highly heterogeneous either in their sensitivity to price or in their sensitivity to perceived quality. In contrast, the results indicate that the seller might lose significant profits (up to 16%) when consumers are highly heterogeneous in their sensitivity to expiration. Unexpectedly, the optimal price consumers pay is, in general, only moderately affected by the heterogeneity in consumer sensitivity.
The revenue management is selling the right product, with the right price, at the right time, to the right customer as defined in literature. The importance of revenue management (RM) in retail sector is increasing so quickly in the recent past. Thus, the institutions begin to use it as a tool of their profitability under the developing technological conditions. However, the number of products makes the implementation so difficult. Every each study about RM is trying to simplify the system, the researches haven’t fully completed yet. In this study, a literature review of RM in retail sector is made to shed light for future researchers, by offering a review on various studies in the literature, research methods, concerned constraints and solution approaches.
When perishable products, such as dairy products, fruits and vegetables, drugs, or batteries are priced uniformly, without taking into consideration the amount of time remaining until the expiration date, consumers may gravitate towards fresher products, leaving some inventory unsold. A dynamic pricing policy, in which products are priced differently as they approach expiration, may encourage customers to buy less-fresh products, potentially increasing revenue and eliminating waste. Following scarce literature on dynamic pricing of storable perishable items, this paper develops a model to determine a product's optimal replenishment schedule and dynamic price over time, with the aim of maximizing the retailer's profit. Customer demand is assumed to be a pseudo-additive function of price and time since replenishment. Some properties of the optimal pricing and replenishment policy are derived by means of necessary and sufficient conditions of optimality. A number of examples show the dynamics of the optimal policy under different assumptions regarding demand. In particular, we evaluate the extent to which the retailer can benefit from the implementation of a dynamic pricing policy as opposed to a static one, and we show that the optimal policy is highly dependent on the form of demand incorporated into the model.
This paper presents a systematic literature review of papers that were published in academic journals on the applications of radio frequency identification (RFID) in supply chain management between the years 2000 and 2015. As the literature on RFID is not confined to specific disciplines or repositories, this paper proposes a discipline-based framework for classifying RFID literature. Five main classification categories are used in this paper: technology, supply chain management, research methodology, application industries, and social aspects. The paper then focuses on the category of supply chain management and reviews 1187 articles that were published between 2000 and 2015 in rated journals. All the papers reviewed are further classified into eight subclasses under this category of supply chain management. The review yields useful insights into the anatomy of RFID literature in supply chain management, enhances evidence-based knowledge, and contributes to informing practice, policymaking and future research. The review reveals that even presently, despite technical and cost challenges, enormous potential exists for the application of RFID in several areas of supply chain management and the prospects are likely to grow into the future. Since RFID solutions have emerged primarily over only the past 20 years, significant research opportunities exist and would need to be addressed to continue to support the technology’s maturation, evaluation, adoption, implementation, and diffusion.
Radio Frequency Identification (RFID) is increasing as a supply chain management tool. This case study gives students an introduction to RFID and its use in a perishable commodity environment (in this case, flowers). It depicts a real enterprise (Daniel's Flowers in Manhattan New York) and how implementing an RFID supply chain control system enabled the company to save money through better control of inventory. For students, it shows how a fairly simple technology solution can be used even with a small business.
Purpose
– The purpose of this paper is to put forward a multi-period dynamic pricing strategy for perishable food considering consumers’ price fairness perception. The impacts of the multi-period retail price, food freshness and inventory shortage risk on consumers’ heterogeneous willingness to pay (WTP) and their strategic purchasing behaviours are studied.
Design/methodology/approach
– The authors present a price optimization model for perishable food, and conduct a laboratory experiment to justify the theoretical model. The data collected are analysed by correlation analysis and nonparametric test.
Findings
– The results obtained reveal, first, food freshness and inventory shortage risk have effect on consumers’ heterogeneous WTP. Second, different retail prices lead to consumers’ strategically purchasing behaviours. Finally, consumers’ intertemporal price fairness perception and the food retailer’s long-term utility maximization can be achieved by developing multi-period dynamic pricing strategy.
Practical implications
– This study suggests the perishable food retailer to apply a step-by-step price markdown strategy. It aims at eliminating price unfairness perceptions caused by loss of freshness and high shortage risk of the perishable food in the subsequent selling periods within the shelf life. Some valuable managerial insights towards perishable pricing for food retailers are discussed.
Originality/value
– This study serves as the first step to utilize a laboratory experiment to dig out consumers’ intertemporal WTP towards perishable food. It also presents a novel way for describing consumers’ intertemporal price fairness perception by equalizing consumers’ average utilities considering consumer surplus, food freshness and shortage risk at different selling periods. The line of research on dynamic pricing concerning consumers’ price fairness perception is quite new in academic research, and has arisen due to its importance for food retailers of maximizing their long-term revenues and also of constructing mutual benefit and lasting connections with the consumers.
RFID (Radio-Frequency IDentification) has been proposed as a leading technology that could help reduce wastage in perishable food supply chains. This is due to their cost-effective ability to reliably identify tagged items as well as gather information on their ambient conditions through appropriate sensors. We model and study the utility of sensor-enabled RFID-generated item-level information in a highly perishable food supply chain from several perspectives including the distributor, retailer and consumer. With specific focus on expiry date and remaining shelf-life, we develop conditions under which the incorporation of RFID could benefit distributors, retailers and consumers. We also consider RFID investment decision in a highly perishable food supply chain.
Michael Tsiros is Associate Professor of Marketing, University of Miami, 501 Kosar/Epstein, Coral Gables, FL 33124 and Tassos Papastratos Research Professor of Marketing, Athens Laboratory of Business Administration, Athens, Greece and Carrie M. Heilman is Assistant Professor of Commerce at the McIntire School of Commerce, University of Virginia, P. O. Box 400173, Charlottesville, VA, 22904-4173.The authors would like to thank Tom Jansen, a grocery store manager in the St. Louis area, for his invaluable insights about the issues studied in this paper. We also thank the four anonymous reviewers whose comments substantially helped improve the contribution of this paper.
This paper examines supply chain design strategies for a specific type of perishable product—fresh produce—using melons and sweet corn as examples. Melons and other types of produce reach their peak value at the time of harvest; product value deteriorates exponentially post-harvest until the product is cooled to dampen the deterioration. Using the product's marginal value of time (MVT), the rate at which the product loses value over time in the supply chain, we show that the appropriate model to minimize lost value in the supply chain is a hybrid of a responsive model from post-harvest to cooling, followed by an efficient model in the remainder of the chain. We also show that these two segments of the supply chain are only loosely linked, implying that little coordination is required across the chain to achieve value maximization. The models we develop also provide insights into the use of a product's MVT to develop supply chain strategies for other perishable products.
In price-sensitive markets, price promotions coupled with an appropriate item replenishment strategy can be effective in controlling
the total costs of servicing the market. In supply chains that handle perishable products, inventory management is already
a complex problem and the management of products in a dynamic-pricing environment is even more challenging. Monitoring and
control of time-sensitive products can be facilitated by the application of radio frequency identification (RFID) technology,
which enables non-contact, real-time data collection and efficient interfacing with the management control system in the supply
chain. This paper describes an integrated framework for inventory management and pricing in a discrete time (periodic review
and ordering) framework, and describes an efficient algorithm, including a new approximation, for the related optimization
problem. We then propose a suitable architecture for the application of RFID technology in this context, to realize the potential
benefits.
International projects present really difficult logistics challenges. In international investment projects, a vast number of individualised deliveries has to be managed through a large supply network in a tight timeframe. This article investigates how the logistic challenges of international projects can be solved by utilising advanced web technologies and product identification. The paper presents a control system being built at Helsinki University of Technology, which is based on distributed programming, and wireless identification technologies. The aim of the system is to change the controlling mechanisms of project deliveries by giving the deliveries themselves the means with which to control their route. This enables the material flows in the project delivery chains to be controlled from the inside of the material flow itself.
The theory of controlled processes is one of the most recent mathematical theories to show very important applications in modern engineering, parti cularly for constructing automatic control systems, as well as for problems of economic control. However, actual systems subject to control do not admit a strictly deterministic analysis in view of random factors of various kinds which influence their behavior. Such factors include, for example, random noise occurring in the electrical system, variations in the supply and demand of commodities, fluctuations in the labor force in economics, and random failures of components on an automated line. The theory of con trolled processes takes the random nature of the behavior of a system into account. In such cases it is natural, when choosing a control strategy, to proceed from the average expected result, taking note of all the possible variants of the behavior of a controlled system. An extensive literature is devoted to various economic and engineering systems of control (some of these works are listed in the Bibliography). is no text which adequately covers the general However, as of now there mathematical theory of controlled processes. The authors ofthis monograph have attempted to fill this gap. In this volume the general theory of discrete-parameter (time) controlled processes (Chapter 1) and those with continuous-time (Chapter 2), as well as the theory of controlled stochastic differential equations (Chapter 3), are presented.
Dynamic logistics control of a perishable commodity is especially crucial due to the difficulties in preservation of freshness, disposal of deteriorated commodities, and uncertainty of supply caused by seasonal fluctuation or abrupt variation of the weather. First, this paper formally presents the Dynamic Allocation Problem with Uncertain Supply (DAP/US) for the perishable commodity supply chain (PC-SC). The objectives of the DAP/US problem are to maximize the total net profit of the strategic alliance of the PC-SC and to determine the optimal orders placed to suppliers and the resultant amount of perishable commodities allocated to retailers. Secondly, a two-stage extended-Genetic Algorithm (eGA) is developed to control the dynamic orders and allocation quantities to prioritized suppliers and retailers, respectively. Thirdly, simulation experiments are conducted and it is shown that eGA demonstrates promising performance under various sizes of problem domains and different statuses of supply uncertainty. Lastly, analytical simulations are also conducted to compare eGA with the traditional approach that ignores the differences among suppliers' supply uncertainties. The simulation results show that eGA achieves great improvement in both the net profit and shortage rates for all sizes of the PC-SCs, with half of their suppliers and retailers having high supply capabilities and fast turnover demands, respectively.
This paper is concerned with the problem of simultaneously setting price and production levels for an exponentially decaying product. Such products suffer a loss in utility which is proportional to the total quantity of stock on hand. A continuous review, deterministic demand model is considered. The optimal ordering decision quantity is derived and its sensitivity to changes in perishability and product price is considered. The joint ordering pricing decision is also computed and consideration of parametric changes of these decisions indicates a non-monotonic response for optimal price to changes in product decay. Issues of market entry and extensions to a model with shortages are also analyzed.
In many industries, managers face the problem of selling a given stock of items by a deadline. We investigate the problem of dynamically pricing such inventories when demand is price sensitive and stochastic and the firm's objective is to maximize expected revenues. Examples that fit this framework include retailers selling fashion and seasonal goods and the travel and leisure industry, which markets space such as seats on airline flights, cabins on vacation cruises, and rooms in hotels that become worthless if not sold by a specific time.
We formulate this problem using intensity control and obtain structural monotonicity results for the optimal intensity (resp., price) as a function of the stock level and the length of the horizon. For a particular exponential family of demand functions, we find the optimal pricing policy in closed form. For general demand functions, we find an upper bound on the expected revenue based on analyzing the deterministic version of the problem and use this bound to prove that simple, fixed price policies are asymptotically optimal as the volume of expected sales tends to infinity. Finally, we extend our results to the case where demand is compound Poisson; only a finite number of prices is allowed; the demand rate is time varying; holding costs are incurred and cash flows are discounted; the initial stock is a decision variable; and reordering, overbooking, and random cancellations are allowed.
This paper considers the relationship between pricing and ordering decisions for a monopolistic retailer facing a known demand function where, over the inventory cycle, the product may exhibit: (i) physical decay or deterioration of inventory called wastage; and (ii) decrease in market value called value drop associated with each unit of inventory on hand. The retailer is allowed to continuously vary the selling price of the product over the cycle. We introduce a notion of instantaneous margin, and use it to derive profit maximizing conditions for the retailer.
The model explains the markdown of retail goods subject to decay. It also provides guidance in determining when price changes during the cycle are worthwhile due to product aging, how often such changes should be made, and how such changes affect ordering intervals and quantities.
Dynamic pricing is the dynamic adjustment of prices to consumers depending upon the value these customers attribute to a product
or service. Today's digital economy is ready for dynamic pricing; however recent research has shown that the prices will have
to be adjusted in fairly sophisticated ways, based on sound mathematical models, to derive the benefits of dynamic pricing.
This article attempts to survey different models that have been used in dynamic pricing. We first motivate dynamic pricing
and present underlying concepts, with several examples, and explain conditions under which dynamic pricing is likely to succeed.
We then bring out the role of models in computing dynamic prices. The models surveyed include inventory-based models, data-driven
models, auctions, and machine learning. We present a detailed example of an e-business market to show the use of reinforcement
learning in dynamic pricing.
Mass customization production means to produce customized products to meet individual customer’s need with the efficiency
of mass production. It introduces challenges such as drastic increase of varieties, very small batch size and random arrival
of orders, thus brings to the manufacturing control system requirements of flexibility and responsiveness which make mass
customization production a fertile ground for intelligent agents. With RFID (Radio Frequency Identification) integration,
an applicable agent-based heterogeneous coordination mechanism is developed to fulfill the requirements. In this paper, we
propose a distributed system framework including a number of intelligent agents to collaborate in a virtual market-like environment.
The proposed price mechanism in our system has the advantage of improving the production efficiency and total profit that
the manufacturer will receive from a certain amount of jobs by utilizing a mechanism of both resource competition and job
competition. Based on the simulation results, we compare the total profit, average delay and average waiting time of our agent-based
price mechanism with those based on the widely exploit FIFO (First In First Out) and EDD (Earliest Due Date) scheduling mechanisms
to show that when resources are with large queue length, the agent-based price mechanism significantly outperforms the other
two.
Automated identification systems which involve the automated retrieval of the identity of objects are becoming a reality for monitoring items moving through the manufacturing supply chain. Automated identification enables accurate, timely information about a specific item to be stored, retrieved and communicated. This information can be used to assist in automated decision making and control functions relevant to that item. This paper specifically explores the impact of such developments on manufacturing shop floor control, examining the way in which both conventional control methods and so-called distributed, intelligent control methods can be enhanced by the availability of accurate, timely information about an item. In the case of distributed, intelligent manufacturing control we begin to build a specification for the concept of an intelligent product—a product whose information content is permanently bound to its material content and which is able to influence decisions made about it.
This paper presents a review of the advances of deteriorating inventory literature since the early 1990s. The models available in the relevant literature have been suitably classified by the shelf-life characteristic of the inventoried goods. They have further been sub-classified on the basis of demand variations and various other conditions or constraints. The motivations, extensions and generalizations of various models in each sub-class have been discussed in brief to bring out pertinent information regarding model developments in the last decade.
We present a multi-period inventory and pricing model for a single product, where the product has a fixed life perishability for a certain number of periods. This problem has significant importance for an efficient operation of the marketing/manufacturing interface at the retail end of the supply chain. The profit maximization problem is modeled as a dynamic program, and the Wagner–Whitin dynamic programming recursions are developed for both perishable and non-perishable products. The structural properties of the model are investigated, and it is shown that the maximum profit function is continuous piecewise concave. Two efficient search heuristics are presented, and the results are compared with benchmark optimum values. The heuristics have been extensively tested and the results indicate that the proposed approach is robust, efficient and practically viable. Directions for future research are presented.
This paper considers two methods for approximating several complex stochastic inventory models. The first method involves determining optimal policies for a simpler modified version of the original problem. Examples of this approach, as used by the author, include stocking perishable inventory, the leadtime lost sales problem and an inventory problem with recycling. A second technique, which is appropriate for continuous review models, is based on using a line of reasoning similar to that used by Hadley and Whitin in the development of a heuristic (Q.R) inventory model. Examples of the approach include solutions of some continuous review systems including stocking decaying inventories and determining expected backorders in an inventory system with rationing.
Traducción de: Upravliaemye sluchainye protsessy Incluye bibliografía e índice
In this paper, we propose a perishable inventory model with consideration of different selling prices of perishable commodities under stochastic demand. In this model, different lifetimes of perishable commodities are provided, and we consider the discriminating selling prices by different lifetimes. We formulate the model into a Markov decision process model to determine an optimal inventory policy that maximizes the expected average profit per period.
Dynamic pricing through RFID-enabled product tracing in food supply chains
- D Li
- O Tang
Li, D. and Tang, O. (2006), ''Dynamic pricing through RFID-enabled product tracing in food
supply chains'', working paper.
Integrating RFID with plastic products and packaging in the retail supply chain
- Mccartney
McCartney (2006), ''Integrating RFID with plastic products and packaging in the retail supply
chain'', available at: www.qlmconsulting.com
WalMart begins RFID rollout
RFIJ Journal (2005), ''WalMart begins RFID rollout'', RFID Journal, available at: www.rfidjournal.
com/article/articleview/926
Wal-Mart's RFID project promising for retail
- J Woods
Woods, J. (2005), ''Wal-Mart's RFID project promising for retail'', CPG Industries. Gartner
Research, available at: www.gartner.com
Further reading
Perishable inventory management and dynamic pricing using RFID technology
- Skordhod Gihman
Gihman and Skordhod (1979), ''Controlled stochastic processes,'' Springer-Verlag, New York, NY.
Hemachandra, N. (2005), ''Perishable inventory management and dynamic pricing using RFID
technology'', Sadhana, Vol. 30, pp. 445-62.