Joint Decision-making Research On Inventory Promotion Of Fresh Products

In daily life, products that are easy to deteriorate and corrosion as well as fresh products such as vegetables, fruits, flowers, seafood and so on can be seen everywhere. With the improvement of people’s living standard, this kind of product are need more and more. The inventory is difficult to manage because of the physiological characteristics of those products themselves. Too little inventory will cause the phenomenon that the market demand is greater than market supply, thus it will reduce the sales. On the contrary, excessive inventory will lead to the increase in the number of the rot and decay products as they are storage in longer time, thus the loss will increase. Therefore, it is of important theoretical significance and practical value to carry out scientific management of the inventory of this kind of products.In this paper, we study the joint decision problem of inventory and promotion for fresh products. Considering the influence of the sales price and the fresh degree on the demand of the product, we established a single cycle of single item ordering and named the model as a promotion joint decision model, on condition that the demand is the linear function for sale price and the exponential function for freshness. The model determines the optimal order quantity, promotion opportunity and promotion efforts, and the goal is to get maximum profits. The paper discusses three different situations in the context of reality. The first promotion joint decision is that that freshness and price affect the demand of fresh food with shelf life at the same time. The second promotion joint decision is that the demand is impacted by freshness and price of fresh goods with shelf life at the same time. The third promotion joint decision is that stochastic demand is impacted by freshness and price of fresh goods at the same time. We established corresponding optimization decision model for each question and analysis the condition for optimal decision. We proposed the approximation method of calculating the optimal decision. Using the numerical example, we analyzed the influence of product shelf life, deterioration rate, promotion opportunity and sales promotion on the profit, and carried out the sensitivity analysis for the main parameters of the model. The results show that shelf life and the deterioration rate both affect the promotion opportunity. If the shelf life is longer, the deterioration rate will be smaller, and if the promotion is later, the promotion effort is smaller. Compared with stochastic demand and deterministic demand, the decision makers will be affected by the risk factors, so the order quantity and the promotion policy will be more conservative, thus resulting in lower profits. These conclusions have some certain guiding significance to the practical problems.