ＡStudy On Dynamic Pricing Mechanism Of Perishable Goods And Consumer's Strategic Behavior

With the development of technology and the fierce of competition in the market, the life cycle of the product is shorter than ever, and the speed product replacement is also accelerated. More and more products have the characteristic of perishability. The perishable goods always have very short life cycle and the salvage value is very small if it can not be sold out in the life cycle. At the same time, the consumer's perceived risk will be enhanced when it approaches the product life cycle, such as milk, bread, vegetable etc. Therefore, the selling and management of perishable goods is a very difficult problem for many retailers.Dynamic pricing mechanism as an engine of perishable good assets management, plays a very important role in all the process. With the coming of Internet, the cost of changing the price is very small and the information can spread quickly in the Internet. The interaction between firms and consumers also enhanced. All of these create a good environment for implementing dynamic pricing. At the same time, consumers can get the information of the product from the Internet easily, such as price,amounts etc .They can become cleverer than ever and can weigh their payoff of immediate purchase against the expected payoff of delaying their purchases, then, make the optimal purchasing decisions by the information.Thus, the implement of dynamic pricing in the Internet environment is a sword with two sides. On one hand, it can increase the profit of the firm, on the other hand, it can not be avoided the strategic behavior of some consumers. This strategic behavior can have a great impact on the firm's dynamic pricing and other decisions. Therefore, it is very necessary to consider how to realize maximize profit in the perishable goods assets management using the Internet technology, at the same time, incorporating the strategic behavior of consumers in the Internet environment for the enterprisers and the theorists.This study based on the formers'shoulders, incorporating the new technology RFID in Internet and the consumer's strategic behavior into the dynamic pricing and ordering decision of perishable goods, using dynamic programming,game theory,economics,econometrics,experiments design etc to explore the problem and get some conclusions below: (1)The seller can maximize profits of selling perishable food through price adjustment based on real-time product quality and values through RFID technology. Dynamic pricing policy always brings a better profit than fixed pricing policy with a given cycle length; at the same time , the profit difference between dynamic pricing with RFID for tanking and tracking product value and fixed price becomes larger with the larger decay rate . The optimal price and the initial inventory level based on RFID is effected by many factors, such as the cost, the dropping rate of the value, the consumers'reserved price, the consumers'arrival rate etc.(2)Consumer's strategic behavior has great effects on the firm's pricing decision. Under the deterministic demand situations, if the amount of the goods is limitless, the profit of the firm will decease with the proportion of strategic consumer increasing. If the firm makes the price decision ignoring the consumers'strategic behavior, the loss of the profit will increase with the proportion of strategic consumer increasing. If the amount of the good is limit, the firm's pricing decision is high interrelated with the amounts:When the amounts is small, the firm can ignore the consumer's strategic behavior; when the amounts is relative much, the consumers can form a rational expectation of getting the product with a lowed price in the second period. The firm's optimal decision is setting a high price in the first period and a relative low price in the second period to realize the equilibrium of rational expectation and to get the maximized profit; when the amounts is plenty, the optimal pricing decision is related with the discounted factor of the consumers. The price in the first period decreases with the increasing of consumers'discounted factor. The firm should set a proper price in the second period to make less consumers would wait to purchase the product in the second.Under the stochastic demand situations, the firm's pricing decision is also effected by the amounts and the consumers'reserved price: the price in the first period decreases with the increasing of initial amounts. At the same time, it exists a critical amounts, when the high reserved price consumer in the market is lager the critical amounts, the firm should choose dynamic pricing decision; when the high reserved price consumer in the market is less than the critical amounts, the firm should choose a refund policy decision to minimize the consumer's strategic behavior.(3) Consumer's strategic behavior has great effects on the firm's pricing decision. Whether under the deterministic demand situations or the stochastic demand situations, the optimal ordering decision is effected by the factors such as the magnitude of price discounting over time, the decay in consumers'valuations, and the arrival rate of the consumers. In contrast with traditional newsvendor model, When the market consists of a sufficiently large number of high-value consumers, rationing is optimal that is, to make a rationing risk to make the high reserved price consumer not wait to purchase in the second period with low price, and the firm to serve the market only at the high price in period 1; when the market consists of a sufficiently large number of low-value consumers , the rationing is never optimal , and the firm to serve all the market.At the same time, the consumer's risk preference has an effect on the optimal amounts. When the consumer's risk aversion is high, the initial ordering amounts can be increased. Thus, the consumer's risk aversion can buffer the adverse impact of the consumer's strategic behavior.(4) Faced with the consumer's strategic behavior, incorporated the price and ordering decision together in the perishable good assets management will enhance the firm's profit. When the consumers are homogeneous, the optimal price is less than the consumer's reserved price, that is, the firm can not realize the first price discrimination; the optimal ordering amounts is lower than ignoring the consumer's strategic behavior; the consumer's risk aversion can buffer the adverse impact of the consumer's strategic behavior. By the welfare analyses, we can get that considering the consumer's strategic behavior will enhance the consumer,the firm and the social welfare.When the consumers are heterogeneous, using the mechanism theory, we get the firm should choose a proper ordering amount in order that the high reserved price consumers can get the product whether at high demand situations or at low demand situations. At the high demand situations, the firm can make a rationing risk to make the high reserved price consumer purchase at the first period; at the low demand situations , the rationing is never optimal , and the firm to serve all the market.In the monopolistic competition, it exist a symmetrical Nash equilibrium; all the firms make the identical pricing decision and ordering decision.(5)By the empirical study of consumer's strategic behavior, we find that the consumers can make the optimal purchasing decision dynamically based on the information of the price and the amounts ,etc. The firm can incorporate the demand in the market and the amounts of the product together, spreading the information strategically in order to effect the consumer's purchasing decision.For the discussion and analysis above, the innovations of this dissertation mainly embody as below:(1) we first consider a RFID-based system and develop ordering decisions and the dynamic pricing schedule for perishable goods with a deterministic demand function in the Internet environment. Then, we extend the model to a stochastic demand case.The most of existing research on RFID or RFID-enabled business models has been focusing on the conceptualization and descriptive analyses on its potential benefits of replacing barcode systems. Quantitative analysis on innovative business models based on RFID data has been rare. Using a price and value dependant demand function, we prove that the benefit of RFID-enabled dynamic pricing and tell the firm how to use RFID technology to implement the price and the ordering decision.(2)Under the consumer's strategic behavior, we consider how to make the optimal price,optimal initial ordering decision respective and how to make the optimal price and optimal initial ordering decision together.The most of existing research on dynamic pricing model or traditional newsvendor model has been ignoring the consumer's strategic behavior. This dissertation uses a discounted factor of consumer value getting a rational expectation equilibrium and the consumer's optimal decision. Then, through the Stackelberg game theory, we get the optimal decision of the firm.When we consider the pricing decision of the firm, we analyze the optimal pricing decision under different amount level in deterministic demand. In the stochastic demand, we get the optimal price and advise that in some situations the firm can use return policy to minimize the consumer's strategic behavior; when we consider the optimal ordering decision of the firm, based on a model in deterministic demand, we extend the model to the stochastic demand when the consumers arrive the market simultaneously or the consumers arrive the market sequentially; when we consider the optimal price and optimal initial ordering decision together, we get the optimal price and optimal ordering amount, by the way, we analyze the consumer's risk aversion'effect on the firm's decision and the consumer's strategic behavior's effect on the consumer,the firm and the social welfare. In the end,we extent the model to the monopolistic competition markets.(3)Through an Internet-based experiments, we confirm the existence of consumer's strategic behavior. At the same time, we get that the difference of price and the amounts information can have great effect on consumer's optimal purchasing decision. We also give some suggestion to the firm of implementing the price and ordering decision.