Optimal pricing model for non-instantaneous deterioration items with price and freshness sensitive demand under the e-commerce environment in China

Abstract

Purpose

The purpose of this paper is to focus on determining the optimal sales price for non-instantaneous deterioration items according to consideration of freshness and demand.

Design/methodology/approach

In this model, the authors have described the demand function which is dependent on price as well time. The products that the deterioration is considered as non-instantaneous have a determinate shelf life, and their demand rate will decrease over time after the beginning of the selling period. This paper depicts that the total profit of non-instantaneous deterioration items using the dynamic pricing strategy is higher than that using fixed pricing strategy.

Findings

Finally, to illustrate and validate the model, the authors have used some numerical examples. A new freshness function and the model to study pricing policy are developed as well applied to solve managerial decision problems.

Originality/value

This paper complements the lack of the existing theoretical research of pricing for non-instantaneous deterioration items under an e-commerce environment. A new freshness function and the model to study pricing policy are developed as well applied to solve managerial decision problems.

Citation

Xu, W., Zhou, S., Zhao, K., Shi, Y. and Bingzhen, S. (2022), "Optimal pricing model for non-instantaneous deterioration items with price and freshness sensitive demand under the e-commerce environment in China", Kybernetes, Vol. 51 No. 2, pp. 623-640. https://doi.org/10.1108/K-05-2020-0261