Economic Order Quality Model for Determining the Sales Prices of Fresh Goods at Various Points in Time

Abstract

Although the safe consumption of goods such as food products, medicine, and vaccines is related to their freshness, consumers frequently understand less than suppliers about the freshness of goods when they purchase them. Because of this lack of information, apart from sales prices, consumers refer only to the manufacturing and expiration dates when deciding whether to purchase and how many of these goods to buy. If dealers could determine the sales price at each point in time and customers' intention to buy goods of varying freshness, then dealers could set an optimal inventory cycle and allocate a weekly sales price for each point in time, thereby maximizing the profit per unit time. Therefore, in this study, an economic order quality model was established to enable discussion of the optimal control of sales prices. The technique for identifying the optimal solution for the model was determined, the characteristics of the optimal solution were demonstrated, and the implications of the solution's sensitivity analysis were explained.

Dynamic Sales Price Control Model for Exclusive Exquisite Products within a Time Interval

“…The first type of study discussed fresh, or deteriorating, products whose "freshness" (i.e., quality) declines with time; examples of these products are food, flowers, and medications. This type of study focused on how product freshness affects customer utility and in turn affects customer demand [62][63][64]. Some retail chains offer discounts on products according to their expiration dates (for example, PX Mart in Taiwan provides a 20% off discount on all fresh products that will expire soon); such a practice is not appropriate, because it neglects the fact that customers' different requirements for product expiration date (i.e., freshness) may reflect customers' different considerations apart from price.…”