Optimal Two-Period Pricing of Perishable Product Considering Quantity Doscount Policy

Abstract:

The perishable products’ dynamic pricing with quantity discount was studied. Assuming that consumer’s reservation price draws from a uniform distribution. The seller used two-phase pricing, and introduced the all-quantity discount policy when the remaining inventory was bigger than zero in second phase. When the quantity discount was not considered, the basic model was given to present the optimal two-phase pricing strategy. Based on the basic model, the extension model gave the optimal quantity discount strategy. Finally, MATLAB was used to implement a numerical simulation and sensitive tests were provided based on the second phrase’s price discount is the linear function of the consumer’s proportion that purchased two units product. We conclude that the remaining inventory lowers and the seller’s profit increases obviously. The profit increment rate increases significantly when consumers’ reservation prices vary significantly.