Optimal pricing and replenishment policy for perishable food supply chain under inflation

Xiangmeng Huang; Shuai Yang; Zhanyu Wang

doi:10.1016/j.cie.2021.107433

Optimal pricing and replenishment policy for perishable food supply chain under inflation

Comput Ind Eng. 2021 Aug:158:107433. doi: 10.1016/j.cie.2021.107433. Epub 2021 Jun 2.

Authors

Xiangmeng Huang¹, Shuai Yang¹, Zhanyu Wang²

Affiliations

¹ Business School, Changshu Institute of Technology, Suzhou, China.
² School of Computer Science and Engineering, Changshu Institute of Technology, Suzhou, China.

Abstract

The COVID-19 outbreak-caused blockade and disruption of the supply chain have dramatically increased the prices of perishable food and other products that rely heavily on the timeliness of supply chains. In the case of inflation, this study aims to make some adjustment to the pricing and replenishment strategy of perishable food and compare it with the scenario without considering inflation to determine the impact of the inflation rate, quality deterioration, time value of money, and characteristics of cash flow of perishable food sales on the supply chain decision-making. We used the discounted cash flow (DCF) model to measure retailers' revenue, which established that the optimal pricing and replenishing strategy could maximize the retailers' profit. Besides, the findings were compared with the traditional profit model. Moreover, numerical experiments and sensitivity analysis were provided for decision support to retailers. Overall, this study validates that inflation significantly affects the pricing and replenishment strategy, and the DCF model is more suitable to evaluate the profits of perishable food.

Keywords: Inflation; Optimal pricing; Perishable food; Replenishment strategy; Supply chain; Time value of money.