Multi-period dynamic pricing model for deteriorating products in a supply chain with preservation technology investment and carbon emission

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. Al-gorithms 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.

Automated summary

This study develops a multi-period dynamic pricing model for a deteriorating product in a two-echelon supply chain. The model considers various factors such as retail price, inventory, reference price, and product freshness to analyze demand and profit for the retailer. Preservation technology investment (PTI) and carbon emissions are also taken into account, and algorithms are developed to optimize replenishment cycle length, retail price, and total profit. The results suggest that efficient PTI and dynamic pricing policy can greatly enhance supply chain profit, and the initial reference price plays a crucial role in improving profit.