Sustainable Dynamic Pricing for Perishable Food with Stochastic Demand

In current competitive environment, retailers are facing a fierce competition and are aiming to manipulate customer purchasing attitudes. Dynamic pricing strategy is a major determinant of retailer's profitability when considering perishable food. Furthermore, increasing pressure from society and international organizations calls for food security, safety and decreased food waste and losses. This paper investigates dynamic pricing strategy with the objective of maximizing revenue and minimizing food waste to ensure sustainability. A simulation model with stochastic demand based on product price and age is developed using ExtendSim™ Suite. The effect of inventory replenishment quantity on the performance measures is analyzed. Results reveal the superiority of dynamic pricing over fixed pricing strategy in terms of retailer profit and food waste.