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Paper Information

Journal:   PRODUCTION AND OPERATIONS MANAGEMENT   fall 2018-winter 2019 , Volume 9 , Number 2 (17) #p00523; Page(s) 179 To 193.

Pricing and Determining the Optimal Discount of Perishable Goods to Speed up Demand Rate

* Technology Development Institute, ACECR, Tehran, Iran
In the competitive market of perishable cargoes, determining the price of the product and making opportunities for customers to accelerate the sale of goods through discounts is crucial. Over the life of perishable goods, generally its value reduced to the customer, in this situation, to encourage the purchase, policies such as a discount or reduced price sales policies can be effective. Literature has not provided a model for determining the optimal time to announce a price reduction. While early or late prices announcement could reduce profit, the aim of this paper is to analyze such a model at the level of an enterprise. In the modeling, we assumed that by announcing price discount, tangible changes occur in demand, and demand is a function of price and time. The demand rate in the discount time is decreasing in the beginning of the time and then declining over time. The purpose of the model is determining the optimal price, discount time and order size to maximize the total profit in a single period. After modeling, concavity of the profit function is considered and optimal pricing and discounts are exclusive. Then, a heuristic algorithm derived from the literature was used in order to determine the optimal price, the optimal discount time and the optimal order quantity.
Keyword(s): Pricing,Perishable product,Price discount
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